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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
ESYNCH CORPORATION
(Exact name of Company as specified in its charter)
Delaware 87-0461856
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
15502 Mosher Avenue, Tustin, California 92780
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(Address of Principal Executive Offices) (Zip Code)
eSynch Stock Option Agreements with the Following Persons
(month and year of grant indicated parenthetically):
Thomas Hemingway (3/00); James H. Budd (3/00);
T. Richard Hutt (3/00); David Lyons (3/00) and Robert Way (4/99)
eSynch Warrant Agreements with the Following Persons
(month and year of grant indicated parenthetically):
Donald C. Watters (1/99) and David P. Noyes (1/99)
eSynch Consulting Agreements with the Following Persons:
(month and year of Agreement indicated parenthetically):
Lee Puglisi (10/99) and Ryan Spencer (1/99)
Thomas Hemingway
eSynch Corporation
15502 Mosher Avenue
Tustin, California 92780
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(Name and address of agent for service)
(714) 258-1900
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(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
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- ------------------------ --------------------- ------------------- -------------------------- ----------------------
Proposed maximum Proposed maximum
Title of securities to Amount to be offering price aggregate offering Amount of
be registered registered (1) per share (2) price (2) registration fee
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<S> <C> <C> <C> <C>
Common Stock, $0.001
par value 823,700 shares $13.688 $11,274,393.75 $2,976.44
- ------------------------ --------------------- ------------------- -------------------------- ----------------------
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1. Each Stock Option Agreement for Thomas Hemingway, James Budd, T. Richard
Hutt and David Lyons was issued pursuant to the 1997 Stock Incentive Plan
of Intermark Corporation (an entity that merged with eSynch Corporation
(the "Company")) and grants options to purchase 150,000, 117,000, 117,000
and 11,700 shares of Common Stock respectively to the holder. The Stock
Option Agreement for Robert Way was issued pursuant to an employment
agreement with the Company and grants options to purchase 110,000 shares of
Common Stock to the holder. The Warrant Agreements with Donald Watters and
David Noyes were issued pursuant to Consulting Agreements with the Company
and each grants the holder warrants to purchase 150,000 shares of Common
Stock. Each Consulting Agreement with Lee Puglisi and Ryan Spencer grants
the holder 40,000 and 3,000 shares of Common Stock respectively of which
15,000 and 3,000 shares of Common Stock respectively are being registered.
2. Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 (as amended), on
the basis of $13.688 per share, the average of the high and low prices of
the Common Stock on the OTC Bulletin Board on March 21, 2000.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN AND AGREEMENT INFORMATION
The documents containing the information required by Part I will be
sent or given to the persons listed on the cover page as specified by Rule
428(b)(1). Such documents need not be filed with the Securities and Exchange
Commission (the "Commission") either as part of this registration statement or
as prospectuses or prospectus supplements pursuant to Rule 424. These documents
and the documents incorporated by reference in the registration statement
pursuant to Item 3 of Part II of this Form, taken together, constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act of
1933, as amended (the "Securities Act").
ITEM 2. REGISTRANT INFORMATION
Upon the written or oral request by a participant in any of the
agreements listed on the cover page, the Company will provide any of the
documents incorporated by reference in Item 3 of Part II of this Registration
Statement (which documents are incorporated by reference into this Section 10(a)
prospectus), any documents required to be delivered to participants pursuant to
Rule 428(b) and other additional information about such agreements. All of such
documents and information will be available without charge. Any and all such
requests should be directed to the Company at 15502 Mosher Avenue, Tustin,
California 92780, telephone (714) 258-1900, attention: Corporate Secretary.
EXPLANATORY NOTE
This Registration Statement has been prepared in accordance with the
requirements of Form S-8 and Form S-3 pursuant to the Securities Act. The Form
S-8 portion of this Registration Statement will be used for offers of shares of
common stock, par value of $.001 per share (the "Common Stock"), of the Company,
pursuant to each of the agreements listed on the cover page. In accordance with
the Note to Part I of Form S-8, the information specified by Part I for Form S-8
has been omitted from this Registration Statement. The Reoffer Prospectus filed
as a part of this Registration Statement has been prepared in accordance with
the requirements of Part I of Form S-3 and will be used for reofferings or
resales of shares of Common Stock which are deemed to be control securities
which have been or will be acquired by control persons, or restricted
securities, pursuant to each of the agreements listed below.
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REOFFER PROSPECTUS
ESYNCH CORPORATION
150,000 shares of Common Stock under the Stock Option Agreement with Thomas
Hemingway.
117,000 shares of Common Stock under the Stock Option Agreement with James
H. Budd.
117,000 shares of Common Stock under the Stock Option Agreement with T.
Richard Hutt.
11,700 shares of Common Stock under the Stock Option Agreement with David
Lyons.
110,000 shares of Common Stock under the Stock Option Agreement with Robert
Way.
150,000 shares of Common Stock under the Warrant Agreement with Donald C.
Watters, Jr.
150,000 shares of Common Stock under the Warrant Agreement with David P.
Noyes.
15,000 shares of Common Stock under the Consulting Agreement with Lee
Puglisi.
3,000 shares of Common Stock under the Consulting Agreement with Ryan
Spencer.
The shares of common stock, $.001 par value (the "Common Stock"),
covered by this Reoffer Prospectus may be offered and sold to the public by
those stockholders of the Company listed above (the "Selling Stockholders"), all
of whom are "affiliates" (as that term is defined in Rule 405 of the General
Rules and Regulations under the Securities Act of 1933, as amended (the
"Securities Act")) of the Company, with the exception of Messrs. Puglisi and
Spencer. The Selling Stockholders may sell a maximum of 823,700 shares of Common
Stock (the "Shares"). The Selling Stockholders acquired or will acquire the
Shares pursuant to their exercise of stock options or warrants granted to them,
or pursuant to the award of Common Stock, under the agreements listed above.
All or a portion of the Shares may be offered for sale, from time to
time, on the Over-the-Counter ("OTC") Bulletin Board or otherwise, at prices and
terms then obtainable, or in negotiated transactions, subject to certain
limitations. However, any Shares covered by this Reoffer Prospectus that qualify
for sale pursuant to Rule 144 under the Securities Act may be sold under Rule
144 instead of pursuant to this Reoffer Prospectus. See "Plan of Distribution."
We will not receive any of the proceeds from the sale of the Shares by
the Selling Stockholders, but we will receive funds in connection with the
exercise of any stock options and warrants relating to such Shares. The Company
will use such funds for working capital. The Company will bear all expenses of
registration incurred in connection with this offering, but individual Selling
Stockholders will bear any brokerage commissions, discounts and other expenses
that they incur.
Our Common Stock is listed on the OTC Bulletin Board under the symbol
"ESYN." On March 21, 2000, the last reported sale price of the Common Stock was
$13.844.
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THESE ARE SPECULATIVE SECURITIES AND THIS INVESTMENT INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 3.
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Neither the Securities and Exchange Commission (the "Commission") nor
any state securities commission has approved or disapproved of these securities
or passed upon the accuracy or the adequacy of the Prospectus.
Any representation to the contrary is a criminal offense.
The date of this Reoffer Prospectus is March 21, 2000
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TABLE OF CONTENTS
<TABLE>
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AVAILABLE INFORMATION.................................................................1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.......................................2
PROSPECTUS SUMMARY....................................................................2
THE COMPANY...........................................................................3
OUR BUSINESS.......................................................................3
OUR HISTORY........................................................................3
THE OFFERING..........................................................................3
RISK FACTORS..........................................................................3
WE HAVE A LIMITED OPERATING HISTORY AND REVENUES HAVE BEEN MINIMAL TO DATE.........4
OUR FUTURE OPERATING RESULTS ARE UNPREDICTABLE.....................................4
WE NEED ADDITIONAL CAPITAL.........................................................4
MANAGEMENT OWNS A CONTROLLING INTEREST IN ESYNCH CORPORATION.......................5
THE LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OPERATIONS........................5
A FAILURE TO ATTRACT KEY PERSONNEL COULD ADVERSELY AFFECT OUR PLANS................5
WE FACE COMPETITION IN THE MARKETS WE SERVE........................................5
THERE IS A SPORADIC TRADING MARKET FOR OUR COMMON STOCK............................5
VOLATILITY AND STOCK MARKET RISK...................................................6
A LARGE AMOUNT OF SHARES WILL BECOME AVAILABLE FOR FUTURE SALE.....................6
FUTURE ISSUANCES OF STOCK COULD ADVERSELY AFFECT HOLDERS OF COMMON STOCK...........6
WE RUN A RISK OF SYSTEM CAPACITY CONSTRAINTS AND SYSTEM FAILURE....................6
OUR INTERNET BUSINESS IS VULNERABLE TO THIRD PARTY MISCONDUCT......................6
WE RELY ON TRADE SECRET PROTECTION TO PROTECT SOME OF OUR RIGHTS...................7
WE WILL DEPEND ON ACCEPTANCE OF OUR BRAND NAMES....................................7
WE NEED TO PROTECT OUR BUSINESS NAMES..............................................7
WE COULD FACE LIABILITY FOR MATERIALS DISSEMINATED THROUGH THE INTERNET............7
OUR EVOLVING BUSINESS PLAN MAY CHANGE..............................................7
ADDITIONAL RISKS...................................................................8
FORWARD-LOOKING AND CAUTIONARY STATEMENTS.............................................9
USE OF PROCEEDS.......................................................................9
SELLING STOCKHOLDERS.................................................................10
PLAN OF DISTRIBUTION.................................................................11
LEGAL MATTERS........................................................................11
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES..12
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eSynch, Electronic Digital Distribution, Kiss Software, Oxford Media
and all product or service names of eSynch used in this Prospectus are
unregistered trademarks, service marks and tradenames of eSynch. The logos
associated with such names are unregistered trademarks and service marks of
eSynch. Other brand names or trademarks appearing in this prospectus are the
property of their respective owners.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith is required to file periodic reports, proxy statements and
other information with the Commission. The reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, Room
1024, N.W., Washington, D.C. 20549 and the Commission's Regional Offices at 7
World Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials can also be obtained by mail from the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. You may obtain information on the operation of the Public Reference Room
by calling the Commission at 1-800-SEC-0330. The Commission also maintains a
site on the World Wide Web that contains reports, proxy and information
statements and other information regarding registrants that file electronically.
The address of such site is http://www.sec.gov. See "Incorporation of Certain
Documents by Reference.
The Company has filed with the Commission a Registration Statement on
Form S-8 under the Securities Act with respect to the Shares of Common Stock
offered by this Reoffer Prospectus. This Reoffer Prospectus does not contain all
the information set forth in or annexed as exhibits to the Registration
Statement. For further information with respect to the Company and the Shares of
Common Stock offered by this Reoffer Prospectus, reference is made to the
Registration Statement and to the financial statements, schedules and exhibits
filed as part thereof or incorporated by reference herein. Copies of the
Registration Statement, together with such financial statements, schedules and
exhibits, may be obtained from the public reference facilities of the Commission
at the addresses listed above, upon payment of the charges prescribed therefor
by the Commission. Statements contained in this Reoffer Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete and in each instance, reference is made to the copy of such contract or
other documents, each such statement being qualified in its entirety by such
reference. Copies of such contracts or other documents, to the extent that they
are exhibits to this Registration Statement, may be obtained from the public
reference facilities of the Commission, upon the payment of the charges
prescribed therefor by the Commission.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in and made part of this registration statement by reference,
except to the extent that any statement or information therein is modified,
superseded or replaced by a statement or information contained in any other
subsequently filed document incorporated herein by reference.
(1) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999.
(2) The Company's Current Report on Form 8-K dated February 15, 2000.
(3) The Company's Current Report on Form 8-K dated February 8, 2000.
(4) The Company's Current Report on Form 8-K dated January 27, 2000.
(5) The Company's Current Report on Form 8-K dated October 15, 1999.
(6) The Company's Current Report on Form 8-K/A dated August 13, 1999.
(7) The Company's Current Report on Form 8-K dated April 19, 1999.
(8) The description of the Company's Common Stock, filed with the
Commission on February 29, 2000 on Form SB-2 describing the Common
Stock referred to herein, including any amendment or report filed to
update the description.
The Company undertakes to provide without charge to each person,
including any beneficial owner of Shares of Common Stock, to whom this Reoffer
Prospectus is delivered, on written or oral request of any such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents). Written or oral requests for such copies
should be directed to the Company, at 15502 Mosher Avenue, Tustin, California,
92780, telephone number (714) 258-1900.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this Reoffer
Prospectus. This summary is not complete and may not contain all of the
information that you should consider before purchasing our Common Stock. Certain
statements made in this Reoffer Prospectus constitute "forward-looking
statements" under the Private Litigation Reform Act of 1995. See
"Forward-Looking Statements."
In this prospectus, "eSynch," "we," "us" and "our" refer to eSynch
Corporation and its subsidiaries.
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THE COMPANY
OUR BUSINESS
We provide advanced computer Internet utility programs and
video-on-demand products, and we market and sell software, hardware and video on
the Internet. We accomplish this through the development of Electronic Digital
Distribution ("EDD") technology that enables us to deliver software, video or
audio content from a wide range of sources. Our proprietary EDD system allows a
digital product to be wrapped in a secure digital envelope and distributed
across the Internet and cable and satellite networks. We also employ this system
in our online malls.
Our target customers include dealers and resellers such as broadcasting
and telecommunications companies that may use our technology to distribute
electronic content on demand to their viewers or subscribers, as well as
end-users who have broadband connections to the Internet. We generate revenue by
selling digital content or software and by selling advertising space in our
digital delivery process, which allows for banner advertising.
To date, our primary activities have consisted of raising capital, and
acquiring companies in the on-line, software and related areas.
OUR HISTORY
We were incorporated in Delaware on December 21, 1988, under the name
Tri-Nem, Inc. On October 5, 1994, we changed our name to Innovus Corporation
("Innovus"). On August 5, 1998, we merged with Intermark Corporation
("Intermark"). We began a new business direction with the software publishing
and distribution business of Intermark and development of its proprietary EDD
technology. We changed our name to eSynch Corporation on November 9, 1998. We
have continued to expand our operations through acquisitions of other businesses
and internal growth.
Our principal offices are located at 15502 Mosher Avenue, Tustin,
California, 92780 and our telephone number is (714) 258-1900.
THE OFFERING
The Selling Stockholders may offer and sell up to 823,700 Shares of
Common Stock under this Reoffer Prospectus. We will not receive any of the
proceeds from the sale of these Shares, but we will receive funds in connection
with the exercise of any stock options or warrants relating to such Shares. The
Company will use such funds for working capital. See "Use of Proceeds" and
"Selling Stockholders."
RISK FACTORS
Before you decide to purchase the Shares of Common Stock offered under
this Reoffer Prospectus, you should be aware that there are various risks,
including those described below. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also impair our
business operations. If any of the following risks actually occur, our business
could be harmed. In such case, the shares of our Common Stock that you purchase
could decline in value and you may lose all or part of your investment. You
should consider carefully these risk factors before you decide to purchase our
shares.
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WE HAVE A LIMITED OPERATING HISTORY AND REVENUES HAVE BEEN MINIMAL TO DATE
To date, we have generated only minimal revenues. We have only a
limited operating history on which our business can be evaluated and our
business must be considered in light of the risks, uncertainties, expenses and
difficulties frequently encountered by companies in early stages of development
that are entering into new and rapidly evolving markets. These risks include the
following:
- The limited resources that we have to compete with more established
competitors who have greater brand name recognition and greater
resources.
- The need to raise additional capital to sustain operations and the
absence of any assurance that such financing will be obtainable on
acceptable terms when needed, if at all.
- The need to establish alliances or partnerships with established
companies.
- The need to develop brand name recognition and to continually
strengthen customer loyalty and satisfaction.
- Anticipated continued losses from operations.
- The difficulty of managing growth.
- The difficulty of anticipating and adapting to technological, market
and other changes.
- The difficulty of attracting, integrating and motivating qualified
personnel.
We must, among other things, successfully implement and execute our
business strategy, continue to develop and upgrade our technology, enhance our
services and products to meet the needs of a changing market, and provide
superior customer service.
OUR FUTURE OPERATING RESULTS ARE UNPREDICTABLE
Our operating results are unpredictable and we expect them to fluctuate
in the future due to a number of factors, many of which are outside our control.
These factors include:
- the ability of competitors to provide services and products that are
competitive with our own.
- competition from larger companies with greater brand name recognition
or greater financial, marketing or management resources than those
available to us.
- adverse changes in consumer trends or general economic conditions.
- our ability to keep pace with technological developments.
As a strategic response to changes in the competitive environment, we
may from time to time make certain decisions that temporarily harm our business.
As a result, our operating results at times may be below expectations. If this
happens, it is likely that the value of our Common Stock would decline.
WE NEED ADDITIONAL CAPITAL
Our business model indicates that it is likely that we will incur
operating losses over the next several months. As a result of those losses and
the funds needed for managing acquisitions, working capital and infrastructure
development, we anticipate that we will have to raise substantial additional
capital to sustain our operations during this period. We may not be able to
obtain the financing that our business requires. Even if we can obtain financing
when it is needed, it may not be on favorable terms. In addition, a financing
could have the effect of reducing the percentage of our shares owned by our
existing stockholders, including investors purchasing shares pursuant to this
offering. A financing could have the additional effect of diluting or reducing
the value of the outstanding shares. We may sell shares or grant options or
warrants to buy shares at prices lower than the prevailing value of your shares.
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MANAGEMENT OWNS A CONTROLLING INTEREST IN ESYNCH CORPORATION
Our officers and directors currently own or control a substantial
majority of our outstanding Common Stock. If they act in concert, they will
continue to be able to exercise voting control over eSynch for the foreseeable
future and will be able to elect the entire Board of Directors and generally
determine our management policy. This management control could prevent, or make
more difficult, a sale of eSynch.
THE LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OPERATIONS
Thomas Hemingway and others play a key role in our operations and in
the further development of our business. The loss of the services of any of them
could adversely impact our business and chances for success.
A FAILURE TO ATTRACT KEY PERSONNEL COULD ADVERSELY AFFECT OUR PLANS
Our performance will greatly depend on our ability to hire, train,
retain and motivate additional officers and other key employees. However,
competition for highly skilled managerial, technical, marketing and customer
service personnel is intense. We may not be able to successfully attract,
integrate or retain sufficiently qualified personnel and, in that event, our
business could suffer.
WE FACE COMPETITION IN THE MARKETS WE SERVE
There is intense competition among companies selling services and
products on the Internet. Increased competition is likely to bring both strong
price and quality competition. As a result, in order to remain competitive, we
might have to make additional expenditures on research and development,
marketing, and customer service or to reduce our pricing, or both, which would
adversely affect our ability to achieve and maintain profitability.
There are several other companies involved in media and digital
distribution channels that have far greater financial and management resources
and greater name brand recognition than we have.
THERE IS A SPORADIC TRADING MARKET FOR OUR COMMON STOCK
The public market for our Common Stock is sporadic. After this
offering, you may not be able to resell your shares at or above the public
offering price due to a number of factors, including:
- actual or anticipated fluctuations in our operating results or
annualized contract values.
- changes in expectations as to our future financial performance.
- changes in securities analysts' financial estimates.
- the operating and stock price performance of our competitors and other
comparable companies.
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VOLATILITY AND STOCK MARKET RISK
The stock market in general, and the stocks of web-based businesses in
particular, have experienced extreme volatility that often has been unrelated to
the operating performance of particular companies. These broad market and
industry fluctuations may adversely affect the trading price of our Common
Stock, regardless of our actual operating performance.
A LARGE AMOUNT OF SHARES WILL BECOME AVAILABLE FOR FUTURE SALE
We expect the trading price of our Common Stock to fluctuate depending
on the supply of our shares in the public market. We estimate that the amount of
our shares traded publicly has not been more than 2,300,000. That represents
less than 22% of the number of shares that are outstanding on a fully diluted
basis. Many of the shares that are outstanding are or will within the next six
months become available for sale in the public market. Rule 144, this offering,
and our registration of shares pursuant to certain registration rights
agreements will result in a large number of shares being available for public
sale as compared with the number of shares historically traded. A large supply
of shares, unless met by an equal or greater demand, could result in lower
trading prices.
FUTURE ISSUANCES OF STOCK COULD ADVERSELY AFFECT HOLDERS OF COMMON STOCK
The Board of Directors is authorized to issue additional shares of
preferred stock without approval from holders of Common Stock. Preferred stock
can have rights and preferences, as may be determined by the Board of Directors,
that are senior to the Common Stock. The Board of Directors is authorized to
issue additional shares of Common Stock without approval from holders of Common
Stock. Additional Common Stock may be issued or reserved for issuance on terms
and at prices as may be determined by the Board of Directors. Among other
things, such authority may make it more difficult for a person to acquire
eSynch. In turn, this may make it less likely that holders of Common Stock will
receive a premium price for their shares.
WE RUN A RISK OF SYSTEM CAPACITY CONSTRAINTS AND SYSTEM FAILURE
We are largely dependent upon our communications and computer hardware
and software. A high volume of traffic and transactions on our servers could
exceed their capacity. If our digital content were to load slowly, this may
potentially drive away customers. Based on our experience and the experience of
other e-commerce companies, we anticipate that we will experience periodic
system interruptions in the future. Any system interruptions that result in the
unavailability of our service or in reduced customer activity could lead our
users to seek out our competitors. In such an event, we might find it difficult
and might have to incur additional marketing costs to get our users to return to
our servers. Our systems are also vulnerable to damage from earthquakes, fires,
floods, power loss, telecommunications failure, break-ins and similar
catastrophic events. A substantial interruption in the operability of these
systems would harm our business. We do not have any business interruption
insurance that would compensate us for any resulting losses we might incur.
OUR INTERNET BUSINESS IS VULNERABLE TO THIRD PARTY MISCONDUCT
Despite our implementation of network and firewall security, our
servers are vulnerable to computer viruses, physical or electronic break-ins,
deliberate attempts by third parties to exceed the capacity of our systems and
similar disruptive problems. Computer viruses, break-ins or other problems
6
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caused by third parties could lead to interruptions, delays, and losses of data.
The occurrence of any of these risks could harm our business.
WE RELY ON TRADE SECRET PROTECTION TO PROTECT SOME OF OUR RIGHTS
To date, we have relied to a significant degree on intellectual
property laws and technical measures to establish and protect our proprietary
rights. Trade secrets, trademarks and other methods to protect our intellectual
property rights may prove to be ineffective or inadequate to prevent imitation
of our services or products or to prevent others from claiming violations of
their proprietary rights by us. In addition, others may assert rights in our
proprietary rights. Our customer lists are of great value to our business, and
if a competitor acquired these lists, it could harm our business.
WE WILL DEPEND ON ACCEPTANCE OF OUR BRAND NAMES
We believe that the development of brand name recognition is critical
to the success of most businesses, including our own, particularly with the
recent and growing increase in the number of companies that are conducting
business on the Internet. Development and awareness of the eSynch brand name
will depend largely on our success in increasing our customer base and strategic
relationships. If consumers do not perceive us as offering a desirable way to
access digital content and software or if other e-commerce companies do not
perceive us as an effective marketing and sales channel for their products or
services, we would be unsuccessful in promoting our brand name.
WE NEED TO PROTECT OUR BUSINESS NAMES
We have only recently commenced a program designed to obtain trademark
registrations for our software and our business names and service mark
registrations for our service names. We may be unable to obtain such
protections. Registrations or other protections of names may prove to be
inadequate to prevent imitation of our names or to prevent others from claiming
violations of their trademarks and service marks by us. In addition, others may
assert rights in our trademarks and service marks.
WE COULD FACE LIABILITY FOR MATERIALS DISSEMINATED THROUGH THE INTERNET
The law relating to the liability of Internet service companies for
information carried on or disseminated through their services is currently
unsettled. It is possible that claims could be made against Internet service
companies under both U.S. and foreign law for defamation, libel, invasion of
privacy, negligence, copyright or trademark infringement, or other theories
based on the nature and content of the materials disseminated through their
services. Furthermore, the growth and development of the market for Internet
commerce may prompt calls for more stringent consumer protection laws that may
impose additional burdens on companies conducting business over the Internet.
The adoption of any additional laws or regulations may decrease the growth of
the Internet, which, in turn, could decrease the demand for our Internet
auctions and other services. This could increase our cost of doing business or
otherwise harm our business.
OUR EVOLVING BUSINESS PLAN MAY CHANGE
We intend to continue to develop our business plan and to explore
opportunities to expand the breadth and depth of our products and services.
Changes in how business is generally conducted could prevent us from achieving
our business objectives. Financially more powerful providers that offer
competitive services or products could also prevent us from achieving our
business objectives.
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ADDITIONAL RISKS
In addition to matters affecting our industry generally, factors which
could cause actual results to differ from expectations include, but are not
limited to (i) insufficient sales of our software; (ii) the introduction by
competitors of new products with significant competitive advantages over our
products; (iii) the lack of sufficient resources to sustain marketing and other
operations; (iv) the inability to attract and retain sufficient management and
technical expertise, or the loss of key employees; (v) the inadequacy of our
contractual or legal efforts to protect confidential information or intellectual
property, and the financial inability to pursue legal remedies that may be
available; (vi) the ineffectiveness of our selection, due diligence, execution,
and integration of acquisitions; (vii) the direct or indirect effects of hackers
on public utilities, telecommunications networks, customers, vendors, service
providers, and the economy or financial markets generally; (viii) other
technical or communications problems, such as power outages, system failures or
system crashes; and (ix) unknown risks and uncertainties, or the inability to
assess any existing risks and uncertainties.
We believe that this Reoffer Prospectus, which is part of our
registration statement, may be used by the Selling Stockholders for the sale of
the Shares offered hereby for a period of nine months after the date on the
cover page hereof, provided that the information contained herein (including our
financial statements) is not more than 16 months old from the date of such
Reoffer Prospectus and we otherwise comply with applicable securities laws. We
cannot assure you, however, that our registration statement will remain
effective as we intend. The value of the Shares being offered by this Reoffer
Prospectus could deteriorate if a current Reoffer Prospectus covering the Shares
is not part of an effective registration statement, or if the Common Stock is
not registered for sale or exempt from registration in the jurisdictions
governing the sales made under this Reoffer Prospectus.
8
<PAGE>
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
This prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act and
such forward-looking statements are subject to the safe harbors created thereby.
For this purpose, any statements contained in this prospectus except for
historical information may be deemed to be forward-looking statements. Also,
words such as "may," "will," "expect," "believe," "anticipate," "intend,"
"could," "estimate," or "continue" or the negative or other variations thereof
or comparable terminology are intended to help you identify forward-looking
statements. In addition, any statements that refer to expectations, projections
or other characterizations of future events or circumstances are forward-looking
statements. Forward-looking statements include, but are not limited to,
statements regarding:
- Our expectations about the marketplace and consumer acceptance.
- Our marketing and sales plans.
- Our expectations regarding the growth of our business and that our
business model will succeed.
- Our ability to introduce new services and products and improve
technology.
- The success of our technology.
These statements are not guarantees of future performance. Future
performance is subject to risks, uncertainties and assumptions that are
difficult to predict and may be beyond our control. Therefore, our actual
results could differ materially from anticipated results. These risks and
uncertainties include those noted in "Risk Factors" above.
We do not undertake any obligation to update or revise any
forward-looking statements contained in this prospectus for any reason, even if
new information becomes available or other events occur in the future.
USE OF PROCEEDS
The proceeds from the sale of each Selling Stockholder's Common Stock
will belong to the Selling Stockholder. The Company will not receive any
proceeds from such sales of the Common Stock.
9
<PAGE>
SELLING STOCKHOLDERS
The Shares offered under this Reoffer Prospectus are being registered
for reoffers and resales by Selling Stockholders of the Company who have and may
in the future acquire such Shares under the Agreements listed on the cover page
of the Reoffer Prospectus (the "Agreements"). The Selling Stockholders named in
the following table may resell all, a portion, or none of such Shares. There is
no assurance that any of the Selling Stockholders will sell any or all of the
Shares being registered hereunder.
The following table sets forth certain information concerning the
Selling Stockholders as of March 8, 2000, and as adjusted to reflect the sale by
the Selling Stockholders of the Shares offered hereby, assuming all of the
Shares offered hereby are sold:
<TABLE>
<CAPTION>
- ------------------------------- ---------------------------------------------- --------------------------------------
PERCENTAGE OF SHARES OF
COMMON STOCK
SELLING STOCKHOLDERS BENEFICIALLY OWNED(3)
- ------------------------------- ---------------------------------------------- --------------------------------------
NUMBER OF SHARES NUMBER OF SHARES
NAME OWNED (1) OFFERED (2) BEFORE OFFERING AFTER OFFERING
- ------------------------------- -------------------- ------------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Thomas Hemingway(4) 1,704,609 150,000 15.4% 14.0%
- ------------------------------- -------------------- ------------------------- ------------------- ------------------
James H. Budd(5) 1,214,715 117,000 11.4% 10.3%
- ------------------------------- -------------------- ------------------------- ------------------- ------------------
T. Richard Hutt(6) 1,230,391 117,000 11.6% 10.5%
- ------------------------------- -------------------- ------------------------- ------------------- ------------------
David Lyons (7) 11,700 11,700 * *
- ------------------------------- -------------------- ------------------------- ------------------- ------------------
Robert Way(8) 301,857 110,000 2.8% 1.8%
- ------------------------------- -------------------- ------------------------- ------------------- ------------------
Donald C. Watters, Jr.(9) 1,209,759 150,000 10.7% 9.4%
- ------------------------------- -------------------- ------------------------- ------------------- ------------------
David P. Noyes(10) 343,750 150,000 3.2% 1.8%
- ------------------------------- -------------------- ------------------------- ------------------- ------------------
Lee Puglisi (11) 40,000 15,000 * *
- ------------------------------- -------------------- ------------------------- ------------------- ------------------
Ryan Spencer (12) 3,000 3,000 * *
- ------------------------------- -------------------- ------------------------- ------------------- ------------------
</TABLE>
1. Represents shares beneficially owned by the named individual, including
shares that such person has the right to acquire within 60 days of the date
of this Reoffer Prospectus. Unless otherwise noted, all persons referred to
above have sole voting and sole investment power.
2. Does not constitute a commitment to sell any or all of the stated number of
Shares of Common Stock. The number of Shares offered shall be determined
from time to time by each Selling Stockholder at his sole discretion.
3. Based on 10,532,463 shares of Common Stock outstanding as of March 21,
2000.
4. Mr. Hemingway is a Director and the Chief Executive Officer of the Company.
Includes 542,500 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
Includes 115,395 shares of Ms. Detra Mauro Hemingway, the spouse of Mr.
Hemingway.
5. Mr. Budd is a Director and the Vice President of Marketing of the Company.
Includes 117,000 shares which may be purchased pursuant to stock options
which are currently, or within the next 60 days will be, exercisable.
6. Mr. Hutt is a Director, a Vice President and the Secretary/Treasurer of the
Company. Includes 117,000 shares which may be purchased pursuant to stock
options which are currently, or within the next 60 days will be,
exercisable.
7. Mr. Lyons is a Director. Includes 11,700 shares which may be purchased
pursuant to stock options which are currently, or within the next 60 days
will be, exercisable.
8. Mr. Way is a Vice President of the Company. Includes 269,427 shares which
may be purchased pursuant to stock options which are currently, or within
the next 60 days will be, exercisable.
9. Mr. Watters is a Director and the President and Chief Operating Officer of
the Company. Includes 748,568 shares which may be purchased pursuant to
stock options and warrants which are currently, or within the next 60 days
will be, exercisable.
10. Mr. Noyes is the Chief Financial Officer of the Company. Includes 343,750
shares which may be purchased pursuant to stock options and warrants which
are currently, or within the next 60 days will be, exercisable.
11. Mr. Puglisi is a consultant.
12. Mr. Spencer is a consultant.
* Represents less than 1%.
10
<PAGE>
PLAN OF DISTRIBUTION
All or a portion of the Shares offered hereby may be offered for sale,
from time to time, on the over-the-counter bulletin board or otherwise, at
market prices at the time of sale, at prices related to market prices, or in
negotiated transactions.
The Selling Stockholders may effect these transactions by selling the
Common Stock to or through broker-dealers, who may receive compensation in the
form of discounts, concessions or commissions from the Selling Stockholders
and/or the purchasers of the Common Stock for whom the broker-dealer may act as
an agent or to whom they may sell the Common Stock as a principal, or both. The
compensation to a particular broker-dealer may be in excess of customary
commissions.
The Selling Stockholders and broker-dealers who act in connection with
the sale of the Common Stock may be considered "underwriters" within the meaning
of the Securities Act, and any commissions received by such broker-dealers and
profits on any resale of the Common Stock as a principal may be considered
underwriting discounts and commissions under the Securities Act.
In addition, the Shares may be sold pursuant to Rule 144 under the
Securities Act, rather than pursuant to this Reoffer Prospectus.
We have agreed to bear expenses in connection with the registration and
sale of the Common Stock offered by the Selling Stockholders (other than selling
commissions). The Selling Stockholders will pay all brokers' commissions,
concessions or discounts. Our obligation includes paying the filing fees and
costs of filings.
An investor may only purchase the Shares being offered hereby if such
shares are qualified for sale or are exempt from registration under the
applicable securities laws of the state in which such prospective purchaser
resides. We have not registered or qualified the Shares under any state
securities laws and, unless the sale of such Shares to a particular investor is
exempt from registration or qualification under applicable state securities
laws, the sale of such Shares to an investor may not be effected until such
Shares have been registered or qualified with applicable state securities
authorities.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Jeffers, Shaff & Falk, LLP.
11
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law (the "Delaware
GCL") empowers a Delaware corporation, including the Company, to indemnify its
directors, officers, employees, and agents under certain circumstances. The
Company's Restated Certificate of Incorporation (the "Certificate") provides
that the Company shall indemnify current and former directors and officers of
the Company or persons who serve or have served, at the request of the Company,
as directors or officers of any other corporation in which the Company at such
time owns or owned shares of stock or is or was a creditor, to the full extent
authorized by the Delaware GCL as it may from time to time be amended. Moreover,
the Certificate provides that no director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except (i) for any breach of the duty of loyalty
to the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) for
liability under Section 174 of the Delaware GCL (involving certain unlawful
dividends or stock repurchases), or (iv) for any transaction from which the
director derived an improper personal benefit.
Under the Delaware GCL, to the extent that an officer or director of a
corporation is successful on the merits in the defense of an action, the
corporation must indemnify such person for his or her actual and reasonable
expenses incurred in connection with such defense. The Certificate provides that
the Company shall indemnify officers and directors against any and all expenses,
including amounts paid on judgment, counsel fees, and amounts paid in settlement
(before or after suit is commenced) by such persons in connection with the
defense or settlement of any claim, action, suit or proceeding in which they, or
any of them, are made parties, to the full extent permitted by the Delaware GCL.
Under its Bylaws, the Company may indemnify its directors, officers,
employees and agents and the directors, officers, employees or agents of any
other corporation if the person was serving at the request of the Company. The
indemnification is required if the person is successful on the merits or
otherwise in defending the claim and is permitted in other circumstances, if
indemnification is authorized in the specific instance by the Company or by a
majority vote of the Company's stockholders. Indemnification is permitted only
if the person was acting in good faith in a manner reasonably believed to be in
or not opposed to the best interests of the Company. If the person is judged to
be liable to the Company in any action brought in the Company's name,
indemnification is only permitted if the court acting in the matter specifically
allows it. The Company is authorized to advance expenses to a director or
officer upon that person's agreement to repay the Company if such person
ultimately is not entitled to indemnification.
The Company is also empowered under its Bylaws to purchase insurance on
behalf of any person whom the Company is required or permitted to indemnify. The
Company has entered into agreements with its directors and executive officers,
which require the Company to indemnify such persons to the fullest extent
permitted by law against certain losses that they may incur in legal proceedings
arising in connection with their services to the Company and to advance expenses
upon their agreement to repay the Company if such person is ultimately not
entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to the Company's directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
12
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by eSynch Corporation (the "Company")
with the Commission are incorporated in and made part of this registration
statement by reference, except to the extent that any statement or information
therein is modified, superseded or replaced by a statement or information
contained in any other subsequently filed document incorporated herein by
reference.
(1) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999.
(2) The Company's Current Report on Form 8-K dated February 15, 2000.
(3) The Company's Current Report on Form 8-K dated February 8, 2000.
(4) The Company's Current Report on Form 8-K dated January 27, 2000.
(5) The Company's Current Report on Form 8-K dated October 15, 1999.
(6) The Company's Current Report on Form 8-K/A dated August 13, 1999.
(7) The Company's Current Report on Form 8-K dated April 19, 1999.
(8) The description of the Company's Common Stock, filed with the
Commission on February 29, 2000 on Form SB-2 describing the Common
Stock referred to herein, including any amendment or report filed to
update the description.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, subsequent to the filing
hereof and prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated and to be a part
hereof from the date of filing such documents.
For purposes of this registration statement, any document or any
statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded to the extent
that a subsequently filed document or statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated herein
by reference modifies or supersedes such document or such statement in such
document. Any statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this registration statement.
II-1
<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5 INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "Delaware
GCL") empowers a Delaware corporation, including the Company, to indemnify its
directors, officers, employees, and agents under certain circumstances. The
Company's Restated Certificate of Incorporation (the "Certificate") provides
that the Company shall indemnify current and former directors and officers of
the Company or persons who serve or have served, at the request of the Company,
as directors or officers of any other corporation in which the Company at such
time owns or owned shares of stock or is or was a creditor, to the full extent
authorized by the Delaware GCL as it may from time to time be amended. Moreover,
the Certificate provides that no director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except (i) for any breach of the duty of loyalty
to the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) for
liability under Section 174 of the Delaware GCL (involving certain unlawful
dividends or stock repurchases), or (iv) for any transaction from which the
director derived an improper personal benefit.
Under the Delaware GCL, to the extent that an officer or director of a
corporation is successful on the merits in the defense of an action, the
corporation must indemnify such person for his or her actual and reasonable
expenses incurred in connection with such defense. The Certificate provides that
the Company shall indemnify officers and directors against any and all expenses,
including amounts paid on judgment, counsel fees, and amounts paid in settlement
(before or after suit is commenced) by such persons in connection with the
defense or settlement of any claim, action, suit or proceeding in which they, or
any of them, are made parties, to the full extent permitted by the Delaware GCL.
Under its Bylaws, the Company may indemnify its directors, officers,
employees and agents and the directors, officers, employees or agents of any
other corporation if the person was serving at the request of the Company. The
indemnification is required if the person is successful on the merits or
otherwise in defending the claim and is permitted in other circumstances, if
indemnification is authorized in the specific instance by the Company or by a
majority vote of the Company's stockholders. Indemnification is permitted only
if the person was acting in good faith in a manner reasonably believed to be in
or not opposed to the best interests of the Company. If the person is judged to
be liable to the Company in any action brought in the Company's name,
indemnification is only permitted if the court acting in the matter specifically
allows it. The Company is authorized to advance expenses to a director or
officer upon that person's agreement to repay the Company if such person
ultimately is not entitled to indemnification.
The Company is also empowered under its Bylaws to purchase insurance on
behalf of any person whom the Company is required or permitted to indemnify. The
Company has entered into agreements with its directors and executive officers,
which require the Company to indemnify such persons to the fullest extent
permitted by law against certain losses that they may incur in legal proceedings
arising in connection with their services to the Company and to advance expenses
upon their agreement to repay the Company if such person is ultimately not
entitled to indemnification.
II-2
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
4.1 Form of Stock Certificate
4.2 Stock Option Agreement between the Company and Thomas Hemingway
4.3 Stock Option Agreement between the Company and James H. Budd
4.4 Stock Option Agreement between the Company and T. Richard Hutt
4.5 Stock Option Agreement between the Company and David Lyons
4.6 Stock Option Agreement between the Company and Robert Way
4.7 Warrant Agreement between the Company and Donald C. Watters, Jr.
4.8 Warrant Agreement between the Company and David P. Noyes
4.9 Consulting Agreement between the Company and Lee Puglisi
4.10 Consulting Agreement between the Company and Ryan Spencer
5.1 Opinion of Jeffers, Shaff & Falk, LLP
23.1 Consent of Jeffers, Shaff & Falk, LLP (included in Exhibit 5.1)
23.2 Consent of Hansen, Barnett & Maxwell.
ITEM 9. UNDERTAKINGS
(a) The Company hereby undertakes to file, during any period in
which offers or sales are being made of the securities registered hereby, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, that are
incorporated by reference in the registration statement.
(b) The Company hereby agrees that, for the purposes of
determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof;
(c) The Company hereby undertakes to remove from registration by
means of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering;
(d) The Company hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's
II-3
<PAGE>
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(e) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
POWER OF ATTORNEY
We, the undersigned officers and directors of eSynch Corporation, do
hereby constitute and appoint Thomas Hemingway or Donald Watters, Jr., or either
of them, as our true and lawful attorneys and agents, to do any and all acts and
things in our name and behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us or any of us in our names and in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto or any
related registration statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, as amended; and we do hereby
ratify and confirm all that the said attorneys and agents, or either of them,
shall do or cause to be done by virtue hereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Tustin, and State of California on March 22, 2000.
eSYNCH CORPORATION
By: /s/ THOMAS HEMINGWAY
------------------------------------
Thomas Hemingway, Chief Executive Officer
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<S> <C> <C>
/s/ Thomas Hemingway Chairman, March 22, 2000
- --------------------------- Chief Executive Officer
Thomas Hemingway and Director
/s/ Donald Watters, Jr. President, Chief March 22, 2000
- --------------------------- Operating Officer
Donald Watters, Jr. and Director
/s/ T. Richard Hutt Vice President, Secretary March 22, 2000
- --------------------------- and Director
T. Richard Hutt
/s/ David Noyes Chief Financial March 22, 2000
- --------------------------- Officer
David Noyes
/s/ James H. Budd Vice President and Director March 22, 2000
- ---------------------------
James H. Budd
/s/ Robert Way Vice President March 22, 2000
- ---------------------------
Robert Way
/s/ Norton Garfinkle Director March 22, 2000
- ---------------------------
Norton Garfinkle
/s/ David Lyons Director March 22, 2000
- ---------------------------
David Lyons
/s/ Robert Orbach Director March 22, 2000
- ---------------------------
Robert Lyons
</TABLE>
II-5
<PAGE>
Exhibit 4.1
Form of Stock Certificate
(obverse)
CUSIP No. 297591 1
eSynch Corporation
Authorized Common Stock: 50,000,000 shares
Par Value: $0.001
This certifies that [NAME]
is the record holder of [NUMBER]
Shares of ESYNCH CORPORATION Common Stock
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of Certificate properly endorsed. This Certificate is
not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
[ ]
[ eSynch Corporation ]
[ Corporate ] --------------------------------
[ Seal ] President
[ ]
[ Delaware ]
[ ] --------------------------------
Secretary
Countersigned & Registered
--------------------------------
Countersigned Transfer Agent -
Authorized Signature
<PAGE>
Form of Stock Certificate
(reverse)
Notice: Signature must be guaranteed by a firm which is a member of a
registered national stock exchange, or by a bank (other than a saving
bank), or a trust company. The following abbreviations, when used in
the inscription on the face of this certificate, shall be construed as
though they were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - _______Custodian ______
TEN ENT - as tenants by entireties (Cust) (Minor)
JT TEN - as joint tenants under Uniform Gifts to Minors
with right of survivorship and Act_____________
not as tenants in common (State)
Additional abbreviations may also be used though not in the
above list.
For value received,____________ hereby sell, assign, and transfer unto
Please insert Social Security or other
indentifying number of assignee
[ ]
[ ]
[ ]
__________________________________________________________________________
(Please print or typewrite name and address,
including zip code of assignee)
__________________________________________________________________________
__________________________________________________________________________
____________________________________________________________________Shares
of the capital stock represented by the within certificate, and do hereby
irrevocably constitute and appoint
_________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation
with the full power of substitution in the premises.
Dated _______________
____________________________________________________________________
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the certificate in every
particular without alteration or enlargement or any change
whatever.
<PAGE>
Exhibit 4.2
ESYNCH CORPORATION
STOCK OPTION AGREEMENT
TYPE OF OPTION (CHECK ONE): [ X ] INCENTIVE [ ] NONQUALIFIED
This Stock Option Agreement (the "Agreement") is entered into as of
March 1, 2000, by and between eSynch Corporation, a Delaware corporation (the
"Company") and Thomas Hemingway (the "Optionee"). On April 24, 1998, the
Optionee was awarded an option with a five year term to purchase shares of
the common stock of Intermark Corporation, an entity that merged with the
Company ("Intermark")(the "Intermark Option") pursuant to Intermark's 1997
Stock Incentive Plan (the "Plan").
This Agreement reflects the conversion of the shares underlying the
Intermark Option into shares of the Company's common stock pursuant to the
Company's merger with Intermark and together with that certain Stock Option
Agreement between the Company and the Optionee with respect to an option to
purchase One Hundred Fifty Thousand (150,000) shares of Common Stock dated of
even date herewith, replaces any agreement that may have been entered into
between the Optionee and Intermark with respect to the Intermark Option.
SECTION 1. GRANT OF OPTION.
The Company hereby grants to Optionee an option (the "Option") to
purchase all or any portion of a total of One Hundred Forty-Two Thousand Five
Hundred (142,500) shares (the "Shares") of the Common Stock of the Company at a
purchase price of Ninety-Four Cents ($0.94) per share (the "Exercise Price"),
subject to the terms and conditions set forth herein and the provisions of the
Plan. If the box marked "Incentive" above is checked, then this Option is
intended to qualify as an "incentive stock option" as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"). If this Option fails
in whole or in part to qualify as an incentive stock option, or if the box
marked "Nonqualified" is checked, then this Option shall to that extent
constitute a nonqualified stock option.
SECTION 2. VESTING OF OPTION.
The right to exercise this Option shall vest immediately and this Option
shall be exercisable in whole or in part, as provided herein.
SECTION 3. TERM OF OPTION.
Optionee's right to exercise this Option shall terminate upon the first
to occur of the following:
3.1 MAXIMUM TERM.
The expiration of five (5) years from the original date of grant (i.e.
April 24, 2003);
<PAGE>
3.2 INVOLUNTARY TERMINATION WITHOUT CAUSE.
The expiration of three (3) months from the Service Termination Date if
such termination occurs for any reason OTHER THAN permanent disability, death,
voluntary resignation or for "cause;" provided, however, that if Optionee dies
during such three-month period the provisions of subsection 3.5 below shall
apply;
3.3 VOLUNTARY RESIGNATION.
The expiration of one (1) month from the Service Termination Date if such
termination occurs due to voluntary resignation; provided, however, that if
Optionee dies during such one-month period the provisions of subsection 3.5
below shall apply;
3.4 PERMANENT DISABILITY.
The expiration of one (1) year from the Service Termination Date if such
termination is due to permanent disability of the Optionee (as defined in
Section 22(e)(3) of the Code);
3.5 DEATH.
The expiration of one (1) year from the Service Termination Date if such
termination is due to Optionee's death or if death occurs during either the
three-month or one-month period following the Service Termination Date pursuant
to subsection 3.2 or subsection 3.3 above, as the case may be;
3.6 TERMINATION FOR CAUSE.
In the event Optionee's Service is terminated by the Company for "cause,"
defined hereby to mean the performance of those acts identified in Section 2924
of the California Labor Code, then this Option, whether or not exercisable on
the Service Termination Date, shall terminate immediately and become void and of
no effect.
SECTION 4. EXERCISE OF OPTION.
4.1 PERSONS PERMITTED TO EXERCISE OPTION.
This Option may be exercised in whole or in part only by the Optionee or
by a Successor designated pursuant to Section 5 below.
4.2 NO EXERCISE AFTER TERMINATION.
This Option may not be exercised at the time of, or any time after,
termination of this Option in accordance with Section 3 above.
2
<PAGE>
4.3 MECHANICS OF EXERCISE.
Exercise of this Option shall be made by delivery of the following to the
Company at its principal executive offices:
(a) A written notice of exercise which identifies this
Agreement and states the number of Shares then being purchased (but no
fractional Shares may be purchased);
(b) A check or cash in the amount of the Exercise Price (or
payment of the Exercise Price in any manner specified in Paragraph 5.3 of
the Plan);
(c) A check or cash in the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal,
state or other applicable tax laws with respect to the taxable income, if
any, recognized by the Optionee in connection with the exercise of this
Option (unless the Company and Optionee shall have made other
arrangements for deductions or withholding from Optionee's wages, bonus
or other compensation payable to Optionee, or by the withholding of
Shares issuable upon exercise of this Option or the delivery of Shares
owned by the Optionee in accordance with the provisions of the Plan,
provided such arrangements satisfy the requirements of applicable tax
laws); and
(d) A letter, if requested by the Company, in such form and
substance as the Company may require, setting forth the investment intent
of the Optionee, or of a Successor designated pursuant to Section 5, as
the case may be.
SECTION 5. TRANSFERS ON DEATH OF OPTIONEE; RESTRICTIONS ON LIFETIME
ASSIGNMENTS.
Any attempt to sell, pledge, assign, hypothecate, transfer or dispose of
this Option in contravention of this Agreement or the Plan shall be void and
shall have no effect.
5.1 No Assignment of Incentive Stock Options.
If and to the extent that this Option comprises an incentive stock
option, this Option can be assigned or transferred (subject to all other
restrictions in this Agreement) only as follows:
(a) The rights of the Optionee under this Agreement may not be
assigned or transferred except by will or by the laws of descent and
distribution,
(b) This Option may be exercised during the lifetime of the
Optionee only by such Optionee;
(c) If the Optionee's Service terminates as a result of his or
her death, Optionee's legal representative, his or her legatee, or the
person who acquired the right to exercise this Option by reason of the
death of the Optionee (with regard to incentive
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stock options, each individually, a "Successor") shall succeed to the
Optionee's rights and obligations under this Agreement; and
(d) After the death of the Optionee, only a Successor may
exercise this Option.
In the context of incentive stock options, the term "Successor" refers to
each of the transferees, successors or assigns described in this subsection 5.1.
5.2 LIMITED ASSIGNABILITY OF NONQUALIFIED STOCK OPTIONS.
If and to the extent that this Option comprises a nonqualified stock
option, this Option can be assigned or transferred (subject to all other
restrictions in this Agreement) only as follows:
(a) The rights of the Optionee under this Agreement may be
assigned or transferred by will or by the laws of descent and
distribution, and Optionee's legal representative, his or her legatee, or
the person who acquired the right to exercise this Option by reason of
the death of the Optionee shall succeed to the Optionee's rights and
obligations under this Agreement, and
(b) The rights of the Optionee under this Agreement also may be
assigned and transferred by the Optionee for estate planning purposes to
members of the immediate family of the Optionee, including for this
purpose, but not limited to, spouses, parents, descendants, brothers and
sisters, or to trusts established for the benefit of such persons.
In the context of nonqualified stock options, the term "Successor" refers
to each of the transferees, successors or assigns described in this subsection
5.2.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
6.1 INVESTMENT INTENT AS TO OPTIONS.
Optionee represents and warrants that this Option is being acquired by
Optionee for Optionee's personal account, for investment purposes only, and not
with a view to the distribution, resale or other disposition thereof.
6.2 INVESTMENT INTENT AS TO SHARES.
Optionee acknowledges that the Company may issue Shares upon the exercise
of the Option without registering such Shares under the Securities Act of 1933,
as amended (the "Act"), on the basis of certain exemptions from such
registration requirement. Accordingly, Optionee agrees that his or her exercise
of the Option may be expressly conditioned upon his or her delivery to the
Company of an investment certificate and agreement including such
representations and undertakings as the Company may reasonably require in order
to assure the availability of such exemptions, including representations,
warranties and agreements that:
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(a) The Optionee is purchasing the Shares solely for the
Optionee's own account for investment and not with a view to or for sale
or distribution of the Shares or any portion thereof and not with any
present intention of selling, offering to sell or otherwise disposing of
or distributing the Shares or any portion thereof. The Optionee also
represents that the entire legal and beneficial interest of the Shares
the Optionee is purchasing is being purchased for, and will be held for
the account of, the Optionee only and neither in whole nor in part for
any other person.
(b) The Optionee has discussed the Company and its plans,
operations and financial condition with its officers and that the
Optionee has received all such information as the Optionee deems
necessary and appropriate to enable the Optionee to evaluate the
financial risk inherent in making an investment in the Shares of the
Company, and has received satisfactory and complete information
concerning the business and financial condition of the Company in
response to all inquiries in respect thereof.
(c) The Optionee realizes that the purchase of the Shares will
be a highly speculative investment.
(d) The Optionee is able, without impairing the Optionee's
financial condition, to hold the Shares for an indefinite period of time
and to suffer a complete loss on the investment.
(e) The Optionee acknowledges that he is aware that the Shares
to be issued to him by the Company pursuant to this Agreement have not
been registered under the Act, and
(i) The Shares must be held indefinitely unless a
transfer of them is subsequently registered under the Act or an
exemption from such registration is available;
(ii) The share certificate(s) representing the Shares
will be stamped with the legends restricting transfer as specified
in this Agreement; and
(iii) The Company will make a notation in its records of
the aforementioned restrictions on transfer and legends as
described in this Agreement.
(f) The Optionee understands that the Shares are restricted
securities within the meaning of Rule 144 promulgated under the Act; that
the exemption from registration under Rule 144 will not be available in
any event for at least one year from the date of sale of the Shares to
the Optionee, and even then will not be available unless (i) a public
trading market then exists for the Shares of the Company, (ii) adequate
current public information concerning the Company is then available to
the public, (iii) the Optionee has been the beneficial owner and the
Optionee has paid the full purchase price for the Shares at least one
year prior to the sale, and (iv) the other terms and conditions of Rule
144 are
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complied with; and that any sale of the Shares may be made by it
only in limited amounts in accordance with such terms and conditions of
Rule 144, as amended from time to time.
(g) Without in any way limiting any of the other provisions of
this Agreement, Optionee's further agreement that the Optionee shall in
no event make any disposition of all or any portion of the Shares which
the Optionee is purchasing unless and until:
(i) There is then in effect a registration statement
under the Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(ii) (A) the Optionee shall have notified the Company of
the proposed disposition and shall have furnished the Company with
a detailed statement of the circumstances surrounding the proposed
disposition, (B) the Optionee shall have furnished the Company
with an opinion of counsel to the effect that such disposition
will not require registration of such shares under the Act, and
(C) such opinion of counsel shall have been concurred with by
counsel for the Company and the Company shall have advised the
Optionee of such concurrence.
(h) The Optionee acknowledges that the Optionee has been
furnished with a copy of the Plan, has read the Plan and this Agreement,
and understands that all rights and obligations connected with this
Agreement are set forth in this Agreement and in the Plan.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE.
In the event that the outstanding shares of Common Stock of the Company
are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of a recapitalization, stock split, combination of shares, reclassification,
stock dividend or other similar change in the capital structure of the Company,
then appropriate adjustments shall be made by the Administrator to the number
and kind of Shares subject to the unexercised portion of this Option and to the
Exercise Price per share, in order to preserve, as nearly as practical, but not
to increase, the benefits of the Optionee under this Option, in accordance with
the provisions of the Plan. No fractional share shall be issued under this
Option or upon any such adjustment.
SECTION 8. NO CREATION OR ENLARGEMENT OF OPTIONEE'S RIGHTS TO
CONTINUE IN ANY CAPACITY.
The right of the Company and any Affiliated Company to terminate at will
the Optionee's services to the Company or any Affiliated Company at any time
(whether by dismissal, discharge or otherwise), with or without cause, is
specifically reserved. Nothing in this Agreement shall diminish or impair in any
manner whatsoever the right or power of the Company or any Affiliated Company to
terminate the Optionee's Service for any reason, with or without cause.
6
<PAGE>
SECTION 9. RIGHTS AS STOCKHOLDER.
The Optionee (or transferee of this option by will or by the laws of
descent and distribution) shall have no rights as a stockholder with respect to
any Shares covered by this Option until the date of the issuance of a stock
certificate or certificates to him or her for such Shares, notwithstanding the
exercise of this Option.
SECTION 10. "MARKET STAND-OFF" AGREEMENT.
Optionee agrees that, if requested by the Company or the managing
underwriter of any proposed public offering of the Company's securities,
Optionee will not sell or otherwise transfer or dispose of any Shares held by
Optionee without the prior written consent of the Company or such underwriter,
as the case may be, during such period of time, not to exceed 180 days following
the effective date of the registration statement filed by the Company with
respect to such offering, as the Company or the underwriter may specify.
SECTION 11. RESTRICTIVE LEGENDS.
In addition to all other legends that the Company or its legal counsel
consider appropriate under applicable securities laws, the certificates
representing any Shares purchased pursuant to this Agreement shall bear
substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY SECURITIES
ISSUABLE ON EXERCISE OR WITH RESPECT TO ANY OTHER RIGHT CONNECTED
HEREWITH) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY
HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT AS MAY
BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. IN ADDITION ANY TRANSFEREE OR ISSUEE
OF SUCH SECURITIES MAY BE REQUIRED TO PROVIDE APPROPRIATE INVESTMENT
REPRESENTATIONS PRIOR TO ANY SUCH TRANSFER OR ISSUANCE.
SECTION 12. STOP-TRANSFER NOTICES.
Optionee understands and agrees that, in order to ensure compliance
with the restrictions referred to herein, the Company may issue appropriate
"stop-transfer" instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.
SECTION 13. INTERPRETATION.
This Option is granted pursuant to the terms of the Plan, and shall in
all respects be interpreted in accordance therewith. The Administrator shall
interpret and construe this Option and the Plan, and any action, decision,
interpretation or determination made in good faith by the
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Administrator shall be final and binding on the Company and the Optionee. As
used in this Agreement, the term "Administrator" shall refer to the committee
of the Board of Directors of the Company appointed to administer the Plan,
and if no such committee has been appointed, the term Administrator shall
mean the Board of Directors.
SECTION 14. NOTICES.
Any notice, demand or request required or permitted to be given under
this Agreement shall be in writing and shall be deemed given when delivered
personally or three (3) days after being deposited in the United States mail, as
certified or registered mail, with postage prepaid, and addressed, if to the
Company, at its principal place of business, Attention: the Chief Financial
Officer, and if to the Optionee, at his or her most recent address as shown in
the records of the Company.
SECTION 15. GOVERNING LAW.
The validity, construction, interpretation, and effect of this Option
shall be governed by and determined in accordance with the laws of the State of
California.
SECTION 16. SEVERABILITY.
Should any provision or portion of this Agreement be held to be
unenforceable or invalid for any reason, the remaining provisions and portions
of this Agreement shall be unaffected by such holding.
SECTION 17. ENTIRE AGREEMENT.
This Agreement and the Plan constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior or
contemporaneous written or oral agreements and understandings of the parties,
either express or implied. The Option evidenced hereby may, in the discretion of
the Company, also be evidenced by a certificate in such form as the Company may
approve, in which case such Option certificate and this Agreement shall evidence
one and the same Option, which shall be governed by and construed in accordance
with this Agreement and the Plan.
SECTION 18. AMENDMENT.
The Board shall have full power and authority (subject to certain
amendments requiring stockholder approval pursuant to applicable laws or
regulations) from time to time to alter, amend, suspend or terminate the Plan in
any or all respects as the Board may deem advisable. No such alteration,
amendment, suspension or termination shall be made which shall substantially
affect or impair the rights of any Optionee under an outstanding Option
Agreement without such Optionee's consent. The Board may alter or amend the Plan
to comply with requirements under the Code relating to incentive options or
other types of options which give Optionees more favorable tax treatment than
that applicable to Options granted under the Plan. Upon any such alteration or
amendment, any outstanding Option granted hereunder may, if the
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Administrator so determines and if permitted by applicable law, be subject to
the more favorable tax treatment afforded to an Optionee pursuant to such
terms and conditions.
SECTION 19. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument. Execution and delivery of this Agreement or any
notices, certificates or instruments contemplated herein by fax, facsimile, or
telecopier shall be deemed the execution and delivery of an originally signed
agreement, notice or instrument, as the case may be.
IN WITNESS WHEREOF, the parties have executed this Stock Option Agreement
as of the date first above written.
eSynch Corporation
By: /s/ Donald Watters
----------------------
Name: Donald Watters
--------------------
Title: President
-------------------
"OPTIONEE"
/s/ Thomas Hemingway
--------------------------
(Signature)
Thomas Hemingway
--------------------------
(Type or print name)
9
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Exhibit 4.3
ESYNCH CORPORATION
STOCK OPTION AGREEMENT
TYPE OF OPTION (CHECK ONE): [ X ] INCENTIVE [ ] NONQUALIFIED
This Stock Option Agreement (the "Agreement") is entered into as of
March 1, 2000, by and between eSynch Corporation, a Delaware corporation (the
"Company") and James H. Budd (the "Optionee"). On April 24, 1998, the
Optionee was awarded an option with a five year term to purchase shares of
the common stock of Intermark Corporation, an entity that merged with the
Company ("Intermark")(the "Intermark Option") pursuant to Intermark's 1997
Stock Incentive Plan (the "Plan").
This Agreement reflects the conversion of the shares underlying the
Intermark Option into shares of the Company's common stock pursuant to the
Company's merger with Intermark and replaces any agreement that may have been
entered into between the Optionee and Intermark with respect to the Intermark
Option.
SECTION 1. GRANT OF OPTION.
The Company hereby grants to Optionee an option (the "Option") to
purchase all or any portion of a total of One Hundred Seventeen Thousand
(117,000) shares (the "Shares") of the Common Stock of the Company at a purchase
price of Ninety-Four Cents ($0.94) per share (the "Exercise Price"), subject to
the terms and conditions set forth herein and the provisions of the Plan. If the
box marked "Incentive" above is checked, then this Option is intended to qualify
as an "incentive stock option" as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). If this Option fails in whole or in part
to qualify as an incentive stock option, or if the box marked "Nonqualified" is
checked, then this Option shall to that extent constitute a nonqualified stock
option.
SECTION 2. VESTING OF OPTION.
The right to exercise this Option shall vest immediately and this Option
shall be exercisable in whole or in part, as provided herein.
SECTION 3. TERM OF OPTION.
Optionee's right to exercise this Option shall terminate upon the first
to occur of the following:
3.1 MAXIMUM TERM.
The expiration of five (5) years from the original date of grant (i.e.
April 24, 2003);
<PAGE>
3.2 INVOLUNTARY TERMINATION WITHOUT CAUSE.
The expiration of three (3) months from the Service Termination Date if
such termination occurs for any reason OTHER THAN permanent disability, death,
voluntary resignation or for "cause;" provided, however, that if Optionee dies
during such three-month period the provisions of subsection 3.5 below shall
apply;
3.3 VOLUNTARY RESIGNATION.
The expiration of one (1) month from the Service Termination Date if such
termination occurs due to voluntary resignation; provided, however, that if
Optionee dies during such one-month period the provisions of subsection 3.5
below shall apply;
3.4 PERMANENT DISABILITY.
The expiration of one (1) year from the Service Termination Date if such
termination is due to permanent disability of the Optionee (as defined in
Section 22(e)(3) of the Code);
3.5 DEATH.
The expiration of one (1) year from the Service Termination Date if such
termination is due to Optionee's death or if death occurs during either the
three-month or one-month period following the Service Termination Date pursuant
to subsection 3.2 or subsection 3.3 above, as the case may be;
3.6 TERMINATION FOR CAUSE.
In the event Optionee's Service is terminated by the Company for "cause,"
defined hereby to mean the performance of those acts identified in Section 2924
of the California Labor Code, then this Option, whether or not exercisable on
the Service Termination Date, shall terminate immediately and become void and of
no effect.
SECTION 4. EXERCISE OF OPTION.
4.1 PERSONS PERMITTED TO EXERCISE OPTION.
This Option may be exercised in whole or in part only by the Optionee or
by a Successor designated pursuant to Section 5 below.
4.2 NO EXERCISE AFTER TERMINATION.
This Option may not be exercised at the time of, or any time after,
termination of this Option in accordance with Section 3 above.
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4.3 MECHANICS OF EXERCISE.
Exercise of this Option shall be made by delivery of the following to the
Company at its principal executive offices:
(a) A written notice of exercise which identifies this
Agreement and states the number of Shares then being purchased (but no
fractional Shares may be purchased);
(b) A check or cash in the amount of the Exercise Price (or
payment of the Exercise Price in any manner specified in Paragraph 5.3 of
the Plan);
(c) A check or cash in the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal,
state or other applicable tax laws with respect to the taxable income, if
any, recognized by the Optionee in connection with the exercise of this
Option (unless the Company and Optionee shall have made other
arrangements for deductions or withholding from Optionee's wages, bonus
or other compensation payable to Optionee, or by the withholding of
Shares issuable upon exercise of this Option or the delivery of Shares
owned by the Optionee in accordance with the provisions of the Plan,
provided such arrangements satisfy the requirements of applicable tax
laws); and
(d) A letter, if requested by the Company, in such form and
substance as the Company may require, setting forth the investment intent
of the Optionee, or of a Successor designated pursuant to Section 5, as
the case may be.
SECTION 5. TRANSFERS ON DEATH OF OPTIONEE; RESTRICTIONS ON LIFETIME
ASSIGNMENTS.
Any attempt to sell, pledge, assign, hypothecate, transfer or dispose of
this Option in contravention of this Agreement or the Plan shall be void and
shall have no effect.
5.1 No Assignment of Incentive Stock Options.
If and to the extent that this Option comprises an incentive stock
option, this Option can be assigned or transferred (subject to all other
restrictions in this Agreement) only as follows:
(a) The rights of the Optionee under this Agreement may not be
assigned or transferred except by will or by the laws of descent and
distribution,
(b) This Option may be exercised during the lifetime of the
Optionee only by such Optionee;
(c) If the Optionee's Service terminates as a result of his or
her death, Optionee's legal representative, his or her legatee, or the
person who acquired the right to exercise this Option by reason of the
death of the Optionee (with regard to incentive
3
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stock options, each individually, a "Successor") shall succeed to the
Optionee's rights and obligations under this Agreement; and
(d) After the death of the Optionee, only a Successor may
exercise this Option.
In the context of incentive stock options, the term "Successor" refers to
each of the transferees, successors or assigns described in this subsection 5.1.
5.2 LIMITED ASSIGNABILITY OF NONQUALIFIED STOCK OPTIONS.
If and to the extent that this Option comprises a nonqualified stock
option, this Option can be assigned or transferred (subject to all other
restrictions in this Agreement) only as follows:
(a) The rights of the Optionee under this Agreement may be
assigned or transferred by will or by the laws of descent and
distribution, and Optionee's legal representative, his or her legatee, or
the person who acquired the right to exercise this Option by reason of
the death of the Optionee shall succeed to the Optionee's rights and
obligations under this Agreement, and
(b) The rights of the Optionee under this Agreement also may be
assigned and transferred by the Optionee for estate planning purposes to
members of the immediate family of the Optionee, including for this
purpose, but not limited to, spouses, parents, descendants, brothers and
sisters, or to trusts established for the benefit of such persons.
In the context of nonqualified stock options, the term "Successor" refers
to each of the transferees, successors or assigns described in this subsection
5.2.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
6.1 INVESTMENT INTENT AS TO OPTIONS.
Optionee represents and warrants that this Option is being acquired by
Optionee for Optionee's personal account, for investment purposes only, and not
with a view to the distribution, resale or other disposition thereof.
6.2 INVESTMENT INTENT AS TO SHARES.
Optionee acknowledges that the Company may issue Shares upon the exercise
of the Option without registering such Shares under the Securities Act of 1933,
as amended (the "Act"), on the basis of certain exemptions from such
registration requirement. Accordingly, Optionee agrees that his or her exercise
of the Option may be expressly conditioned upon his or her delivery to the
Company of an investment certificate and agreement including such
representations and undertakings as the Company may reasonably require in order
to assure the availability of such exemptions, including representations,
warranties and agreements that:
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<PAGE>
(a) The Optionee is purchasing the Shares solely for the
Optionee's own account for investment and not with a view to or for sale
or distribution of the Shares or any portion thereof and not with any
present intention of selling, offering to sell or otherwise disposing of
or distributing the Shares or any portion thereof. The Optionee also
represents that the entire legal and beneficial interest of the Shares
the Optionee is purchasing is being purchased for, and will be held for
the account of, the Optionee only and neither in whole nor in part for
any other person.
(b) The Optionee has discussed the Company and its plans,
operations and financial condition with its officers and that the
Optionee has received all such information as the Optionee deems
necessary and appropriate to enable the Optionee to evaluate the
financial risk inherent in making an investment in the Shares of the
Company, and has received satisfactory and complete information
concerning the business and financial condition of the Company in
response to all inquiries in respect thereof.
(c) The Optionee realizes that the purchase of the Shares will
be a highly speculative investment.
(d) The Optionee is able, without impairing the Optionee's
financial condition, to hold the Shares for an indefinite period of time
and to suffer a complete loss on the investment.
(e) The Optionee acknowledges that he is aware that the Shares
to be issued to him by the Company pursuant to this Agreement have not
been registered under the Act, and
(i) The Shares must be held indefinitely unless a
transfer of them is subsequently registered under the Act or an
exemption from such registration is available;
(ii) The share certificate(s) representing the Shares
will be stamped with the legends restricting transfer as specified
in this Agreement; and
(iii) The Company will make a notation in its records of
the aforementioned restrictions on transfer and legends as
described in this Agreement.
(f) The Optionee understands that the Shares are restricted
securities within the meaning of Rule 144 promulgated under the Act; that
the exemption from registration under Rule 144 will not be available in
any event for at least one year from the date of sale of the Shares to
the Optionee, and even then will not be available unless (i) a public
trading market then exists for the Shares of the Company, (ii) adequate
current public information concerning the Company is then available to
the public, (iii) the Optionee has been the beneficial owner and the
Optionee has paid the full purchase price for the Shares at least one
year prior to the sale, and (iv) the other terms and conditions of Rule
144 are
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<PAGE>
complied with; and that any sale of the Shares may be made by it
only in limited amounts in accordance with such terms and conditions of
Rule 144, as amended from time to time.
(g) Without in any way limiting any of the other provisions of
this Agreement, Optionee's further agreement that the Optionee shall in
no event make any disposition of all or any portion of the Shares which
the Optionee is purchasing unless and until:
(i) There is then in effect a registration statement
under the Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(ii) (A) the Optionee shall have notified the Company of
the proposed disposition and shall have furnished the Company with
a detailed statement of the circumstances surrounding the proposed
disposition, (B) the Optionee shall have furnished the Company
with an opinion of counsel to the effect that such disposition
will not require registration of such shares under the Act, and
(C) such opinion of counsel shall have been concurred with by
counsel for the Company and the Company shall have advised the
Optionee of such concurrence.
(h) The Optionee acknowledges that the Optionee has been
furnished with a copy of the Plan, has read the Plan and this Agreement,
and understands that all rights and obligations connected with this
Agreement are set forth in this Agreement and in the Plan.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE.
In the event that the outstanding shares of Common Stock of the Company
are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of a recapitalization, stock split, combination of shares, reclassification,
stock dividend or other similar change in the capital structure of the Company,
then appropriate adjustments shall be made by the Administrator to the number
and kind of Shares subject to the unexercised portion of this Option and to the
Exercise Price per share, in order to preserve, as nearly as practical, but not
to increase, the benefits of the Optionee under this Option, in accordance with
the provisions of the Plan. No fractional share shall be issued under this
Option or upon any such adjustment.
SECTION 8. NO CREATION OR ENLARGEMENT OF OPTIONEE'S RIGHTS TO
CONTINUE IN ANY CAPACITY.
The right of the Company and any Affiliated Company to terminate at will
the Optionee's services to the Company or any Affiliated Company at any time
(whether by dismissal, discharge or otherwise), with or without cause, is
specifically reserved. Nothing in this Agreement shall diminish or impair in any
manner whatsoever the right or power of the Company or any Affiliated Company to
terminate the Optionee's Service for any reason, with or without cause.
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<PAGE>
SECTION 9. RIGHTS AS STOCKHOLDER.
The Optionee (or transferee of this option by will or by the laws of
descent and distribution) shall have no rights as a stockholder with respect to
any Shares covered by this Option until the date of the issuance of a stock
certificate or certificates to him or her for such Shares, notwithstanding the
exercise of this Option.
SECTION 10. "MARKET STAND-OFF" AGREEMENT.
Optionee agrees that, if requested by the Company or the managing
underwriter of any proposed public offering of the Company's securities,
Optionee will not sell or otherwise transfer or dispose of any Shares held by
Optionee without the prior written consent of the Company or such underwriter,
as the case may be, during such period of time, not to exceed 180 days following
the effective date of the registration statement filed by the Company with
respect to such offering, as the Company or the underwriter may specify.
SECTION 11. RESTRICTIVE LEGENDS.
In addition to all other legends that the Company or its legal counsel
consider appropriate under applicable securities laws, the certificates
representing any Shares purchased pursuant to this Agreement shall bear
substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY SECURITIES
ISSUABLE ON EXERCISE OR WITH RESPECT TO ANY OTHER RIGHT CONNECTED
HEREWITH) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY
HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT AS MAY
BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. IN ADDITION ANY TRANSFEREE OR ISSUEE
OF SUCH SECURITIES MAY BE REQUIRED TO PROVIDE APPROPRIATE INVESTMENT
REPRESENTATIONS PRIOR TO ANY SUCH TRANSFER OR ISSUANCE.
SECTION 12. STOP-TRANSFER NOTICES.
Optionee understands and agrees that, in order to ensure compliance
with the restrictions referred to herein, the Company may issue appropriate
"stop-transfer" instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.
SECTION 13. INTERPRETATION.
This Option is granted pursuant to the terms of the Plan, and shall in
all respects be interpreted in accordance therewith. The Administrator shall
interpret and construe this Option and the Plan, and any action, decision,
interpretation or determination made in good faith by the
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Administrator shall be final and binding on the Company and the Optionee. As
used in this Agreement, the term "Administrator" shall refer to the committee
of the Board of Directors of the Company appointed to administer the Plan,
and if no such committee has been appointed, the term Administrator shall
mean the Board of Directors.
SECTION 14. NOTICES.
Any notice, demand or request required or permitted to be given under
this Agreement shall be in writing and shall be deemed given when delivered
personally or three (3) days after being deposited in the United States mail, as
certified or registered mail, with postage prepaid, and addressed, if to the
Company, at its principal place of business, Attention: the Chief Financial
Officer, and if to the Optionee, at his or her most recent address as shown in
the records of the Company.
SECTION 15. GOVERNING LAW.
The validity, construction, interpretation, and effect of this Option
shall be governed by and determined in accordance with the laws of the State of
California.
SECTION 16. SEVERABILITY.
Should any provision or portion of this Agreement be held to be
unenforceable or invalid for any reason, the remaining provisions and portions
of this Agreement shall be unaffected by such holding.
SECTION 17. ENTIRE AGREEMENT.
This Agreement and the Plan constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior or
contemporaneous written or oral agreements and understandings of the parties,
either express or implied. The Option evidenced hereby may, in the discretion of
the Company, also be evidenced by a certificate in such form as the Company may
approve, in which case such Option certificate and this Agreement shall evidence
one and the same Option, which shall be governed by and construed in accordance
with this Agreement and the Plan.
SECTION 18. AMENDMENT.
The Board shall have full power and authority (subject to certain
amendments requiring stockholder approval pursuant to applicable laws or
regulations) from time to time to alter, amend, suspend or terminate the Plan in
any or all respects as the Board may deem advisable. No such alteration,
amendment, suspension or termination shall be made which shall substantially
affect or impair the rights of any Optionee under an outstanding Option
Agreement without such Optionee's consent. The Board may alter or amend the Plan
to comply with requirements under the Code relating to incentive options or
other types of options which give Optionees more favorable tax treatment than
that applicable to Options granted under the Plan. Upon any such alteration or
amendment, any outstanding Option granted hereunder may, if the
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Administrator so determines and if permitted by applicable law, be subject to
the more favorable tax treatment afforded to an Optionee pursuant to such
terms and conditions.
SECTION 19. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. Execution and delivery of this Agreement
or any notices, certificates or instruments contemplated herein by fax,
facsimile, or telecopier shall be deemed the execution and delivery of an
originally signed agreement, notice or instrument, as the case may be.
IN WITNESS WHEREOF, the parties have executed this Stock Option Agreement
as of the date first above written.
eSynch Corporation
By: /s/ Thomas Hemingway
---------------------------------
Name: Thomas Hemingway
-------------------------------
Title: Chief Executive Officer
------------------------------
"OPTIONEE"
/s/ James H. Budd
-------------------------------------
(Signature)
James H. Budd
-------------------------------------
(Type or print name)
<PAGE>
Exhibit 4.4
ESYNCH CORPORATION
STOCK OPTION AGREEMENT
TYPE OF OPTION (CHECK ONE): [ X ] INCENTIVE [ ] NONQUALIFIED
This Stock Option Agreement (the "Agreement") is entered into as of
March 1, 2000, by and between eSynch Corporation, a Delaware corporation (the
"Company") and T. Richard Hutt (the "Optionee"). On April 24, 1998, the
Optionee was awarded an option with a five year term to purchase shares of
the common stock of Intermark Corporation, an entity that merged with the
Company ("Intermark")(the "Intermark Option") pursuant to Intermark's 1997
Stock Incentive Plan (the "Plan").
This Agreement reflects the conversion of the shares underlying the
Intermark Option into shares of the Company's common stock pursuant to the
Company's merger with Intermark and replaces any agreement that may have been
entered into between the Optionee and Intermark with respect to the Intermark
Option.
SECTION 1. GRANT OF OPTION.
The Company hereby grants to Optionee an option (the "Option") to
purchase all or any portion of a total of One Hundred Seventeen Thousand
(117,000) shares (the "Shares") of the Common Stock of the Company at a purchase
price of Ninety-Four Cents ($0.94) per share (the "Exercise Price"), subject to
the terms and conditions set forth herein and the provisions of the Plan. If the
box marked "Incentive" above is checked, then this Option is intended to qualify
as an "incentive stock option" as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). If this Option fails in whole or in part
to qualify as an incentive stock option, or if the box marked "Nonqualified" is
checked, then this Option shall to that extent constitute a nonqualified stock
option.
SECTION 2. VESTING OF OPTION.
The right to exercise this Option shall vest immediately and this Option
shall be exercisable in whole or in part, as provided herein.
SECTION 3. TERM OF OPTION.
Optionee's right to exercise this Option shall terminate upon the first
to occur of the following:
3.1 MAXIMUM TERM.
The expiration of five (5) years from the original date of grant (i.e.
April 24, 2003);
<PAGE>
3.2 INVOLUNTARY TERMINATION WITHOUT CAUSE.
The expiration of three (3) months from the Service Termination Date if
such termination occurs for any reason OTHER THAN permanent disability, death,
voluntary resignation or for "cause;" provided, however, that if Optionee dies
during such three-month period the provisions of subsection 3.5 below shall
apply;
3.3 VOLUNTARY RESIGNATION.
The expiration of one (1) month from the Service Termination Date if such
termination occurs due to voluntary resignation; provided, however, that if
Optionee dies during such one-month period the provisions of subsection 3.5
below shall apply;
3.4 PERMANENT DISABILITY.
The expiration of one (1) year from the Service Termination Date if such
termination is due to permanent disability of the Optionee (as defined in
Section 22(e)(3) of the Code);
3.5 DEATH.
The expiration of one (1) year from the Service Termination Date if such
termination is due to Optionee's death or if death occurs during either the
three-month or one-month period following the Service Termination Date pursuant
to subsection 3.2 or subsection 3.3 above, as the case may be;
3.6 TERMINATION FOR CAUSE.
In the event Optionee's Service is terminated by the Company for "cause,"
defined hereby to mean the performance of those acts identified in Section 2924
of the California Labor Code, then this Option, whether or not exercisable on
the Service Termination Date, shall terminate immediately and become void and of
no effect.
SECTION 4. EXERCISE OF OPTION.
4.1 PERSONS PERMITTED TO EXERCISE OPTION.
This Option may be exercised in whole or in part only by the Optionee or
by a Successor designated pursuant to Section 5 below.
4.2 NO EXERCISE AFTER TERMINATION.
This Option may not be exercised at the time of, or any time after,
termination of this Option in accordance with Section 3 above.
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4.3 MECHANICS OF EXERCISE.
Exercise of this Option shall be made by delivery of the following to the
Company at its principal executive offices:
(a) A written notice of exercise which identifies this
Agreement and states the number of Shares then being purchased (but no
fractional Shares may be purchased);
(b) A check or cash in the amount of the Exercise Price (or
payment of the Exercise Price in any manner specified in Paragraph 5.3 of
the Plan);
(c) A check or cash in the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal,
state or other applicable tax laws with respect to the taxable income, if
any, recognized by the Optionee in connection with the exercise of this
Option (unless the Company and Optionee shall have made other
arrangements for deductions or withholding from Optionee's wages, bonus
or other compensation payable to Optionee, or by the withholding of
Shares issuable upon exercise of this Option or the delivery of Shares
owned by the Optionee in accordance with the provisions of the Plan,
provided such arrangements satisfy the requirements of applicable tax
laws); and
(d) A letter, if requested by the Company, in such form and
substance as the Company may require, setting forth the investment intent
of the Optionee, or of a Successor designated pursuant to Section 5, as
the case may be.
SECTION 5. TRANSFERS ON DEATH OF OPTIONEE; RESTRICTIONS ON LIFETIME
ASSIGNMENTS.
Any attempt to sell, pledge, assign, hypothecate, transfer or dispose of
this Option in contravention of this Agreement or the Plan shall be void and
shall have no effect.
5.1 NO ASSIGNMENT OF INCENTIVE STOCK OPTIONS.
If and to the extent that this Option comprises an incentive stock
option, this Option can be assigned or transferred (subject to all other
restrictions in this Agreement) only as follows:
(a) The rights of the Optionee under this Agreement may not be
assigned or transferred except by will or by the laws of descent and
distribution,
(b) This Option may be exercised during the lifetime of the
Optionee only by such Optionee;
(c) If the Optionee's Service terminates as a result of his or
her death, Optionee's legal representative, his or her legatee, or the
person who acquired the right to exercise this Option by reason of the
death of the Optionee (with regard to incentive
3
<PAGE>
stock options, each individually, a "Successor") shall succeed to the
Optionee's rights and obligations under this Agreement; and
(d) After the death of the Optionee, only a Successor may
exercise this Option.
In the context of incentive stock options, the term "Successor" refers to
each of the transferees, successors or assigns described in this subsection 5.1.
5.2 LIMITED ASSIGNABILITY OF NONQUALIFIED STOCK OPTIONS.
If and to the extent that this Option comprises a nonqualified stock
option, this Option can be assigned or transferred (subject to all other
restrictions in this Agreement) only as follows:
(a) The rights of the Optionee under this Agreement may be
assigned or transferred by will or by the laws of descent and
distribution, and Optionee's legal representative, his or her legatee, or
the person who acquired the right to exercise this Option by reason of
the death of the Optionee shall succeed to the Optionee's rights and
obligations under this Agreement, and
(b) The rights of the Optionee under this Agreement also may be
assigned and transferred by the Optionee for estate planning purposes to
members of the immediate family of the Optionee, including for this
purpose, but not limited to, spouses, parents, descendants, brothers and
sisters, or to trusts established for the benefit of such persons.
In the context of nonqualified stock options, the term "Successor" refers
to each of the transferees, successors or assigns described in this subsection
5.2.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
6.1 INVESTMENT INTENT AS TO OPTIONS.
Optionee represents and warrants that this Option is being acquired by
Optionee for Optionee's personal account, for investment purposes only, and not
with a view to the distribution, resale or other disposition thereof.
6.2 INVESTMENT INTENT AS TO SHARES.
Optionee acknowledges that the Company may issue Shares upon the exercise
of the Option without registering such Shares under the Securities Act of 1933,
as amended (the "Act"), on the basis of certain exemptions from such
registration requirement. Accordingly, Optionee agrees that his or her exercise
of the Option may be expressly conditioned upon his or her delivery to the
Company of an investment certificate and agreement including such
representations and undertakings as the Company may reasonably require in order
to assure the availability of such exemptions, including representations,
warranties and agreements that:
4
<PAGE>
(a) The Optionee is purchasing the Shares solely for the
Optionee's own account for investment and not with a view to or for sale
or distribution of the Shares or any portion thereof and not with any
present intention of selling, offering to sell or otherwise disposing of
or distributing the Shares or any portion thereof. The Optionee also
represents that the entire legal and beneficial interest of the Shares
the Optionee is purchasing is being purchased for, and will be held for
the account of, the Optionee only and neither in whole nor in part for
any other person.
(b) The Optionee has discussed the Company and its plans,
operations and financial condition with its officers and that the
Optionee has received all such information as the Optionee deems
necessary and appropriate to enable the Optionee to evaluate the
financial risk inherent in making an investment in the Shares of the
Company, and has received satisfactory and complete information
concerning the business and financial condition of the Company in
response to all inquiries in respect thereof.
(c) The Optionee realizes that the purchase of the Shares will
be a highly speculative investment.
(d) The Optionee is able, without impairing the Optionee's
financial condition, to hold the Shares for an indefinite period of time
and to suffer a complete loss on the investment.
(e) The Optionee acknowledges that he is aware that the Shares
to be issued to him by the Company pursuant to this Agreement have not
been registered under the Act, and
(i) The Shares must be held indefinitely unless a
transfer of them is subsequently registered under the Act or an
exemption from such registration is available;
(ii) The share certificate(s) representing the Shares
will be stamped with the legends restricting transfer as specified
in this Agreement; and
(iii) The Company will make a notation in its records of
the aforementioned restrictions on transfer and legends as
described in this Agreement.
(f) The Optionee understands that the Shares are restricted
securities within the meaning of Rule 144 promulgated under the Act; that
the exemption from registration under Rule 144 will not be available in
any event for at least one year from the date of sale of the Shares to
the Optionee, and even then will not be available unless (i) a public
trading market then exists for the Shares of the Company, (ii) adequate
current public information concerning the Company is then available to
the public, (iii) the Optionee has been the beneficial owner and the
Optionee has paid the full purchase price for the Shares at least one
year prior to the sale, and (iv) the other terms and conditions of Rule
144 are
5
<PAGE>
complied with; and that any sale of the Shares may be made by it
only in limited amounts in accordance with such terms and conditions of
Rule 144, as amended from time to time.
(g) Without in any way limiting any of the other provisions of
this Agreement, Optionee's further agreement that the Optionee shall in
no event make any disposition of all or any portion of the Shares which
the Optionee is purchasing unless and until:
(i) There is then in effect a registration statement
under the Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(ii) (A) the Optionee shall have notified the Company of
the proposed disposition and shall have furnished the Company with
a detailed statement of the circumstances surrounding the proposed
disposition, (B) the Optionee shall have furnished the Company
with an opinion of counsel to the effect that such disposition
will not require registration of such shares under the Act, and
(C) such opinion of counsel shall have been concurred with by
counsel for the Company and the Company shall have advised the
Optionee of such concurrence.
(h) The Optionee acknowledges that the Optionee has been
furnished with a copy of the Plan, has read the Plan and this Agreement,
and understands that all rights and obligations connected with this
Agreement are set forth in this Agreement and in the Plan.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE.
In the event that the outstanding shares of Common Stock of the Company
are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of a recapitalization, stock split, combination of shares, reclassification,
stock dividend or other similar change in the capital structure of the Company,
then appropriate adjustments shall be made by the Administrator to the number
and kind of Shares subject to the unexercised portion of this Option and to the
Exercise Price per share, in order to preserve, as nearly as practical, but not
to increase, the benefits of the Optionee under this Option, in accordance with
the provisions of the Plan. No fractional share shall be issued under this
Option or upon any such adjustment.
SECTION 8. NO CREATION OR ENLARGEMENT OF OPTIONEE'S RIGHTS TO CONTINUE
IN ANY CAPACITY.
The right of the Company and any Affiliated Company to terminate at will
the Optionee's services to the Company or any Affiliated Company at any time
(whether by dismissal, discharge or otherwise), with or without cause, is
specifically reserved. Nothing in this Agreement shall diminish or impair in any
manner whatsoever the right or power of the Company or any Affiliated Company to
terminate the Optionee's Service for any reason, with or without cause.
6
<PAGE>
SECTION 9. RIGHTS AS STOCKHOLDER.
The Optionee (or transferee of this option by will or by the laws of
descent and distribution) shall have no rights as a stockholder with respect to
any Shares covered by this Option until the date of the issuance of a stock
certificate or certificates to him or her for such Shares, notwithstanding the
exercise of this Option.
SECTION 10. "MARKET STAND-OFF" AGREEMENT.
Optionee agrees that, if requested by the Company or the managing
underwriter of any proposed public offering of the Company's securities,
Optionee will not sell or otherwise transfer or dispose of any Shares held by
Optionee without the prior written consent of the Company or such underwriter,
as the case may be, during such period of time, not to exceed 180 days following
the effective date of the registration statement filed by the Company with
respect to such offering, as the Company or the underwriter may specify.
SECTION 11. RESTRICTIVE LEGENDS.
In addition to all other legends that the Company or its legal counsel
consider appropriate under applicable securities laws, the certificates
representing any Shares purchased pursuant to this Agreement shall bear
substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY SECURITIES
ISSUABLE ON EXERCISE OR WITH RESPECT TO ANY OTHER RIGHT CONNECTED
HEREWITH) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY
HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT AS MAY
BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. IN ADDITION ANY TRANSFEREE OR ISSUEE
OF SUCH SECURITIES MAY BE REQUIRED TO PROVIDE APPROPRIATE INVESTMENT
REPRESENTATIONS PRIOR TO ANY SUCH TRANSFER OR ISSUANCE.
SECTION 12. STOP-TRANSFER NOTICES.
Optionee understands and agrees that, in order to ensure compliance
with the restrictions referred to herein, the Company may issue appropriate
"stop-transfer" instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.
SECTION 13. INTERPRETATION.
This Option is granted pursuant to the terms of the Plan, and shall in
all respects be interpreted in accordance therewith. The Administrator shall
interpret and construe this Option and the Plan, and any action, decision,
interpretation or determination made in good faith by the
7
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Administrator shall be final and binding on the Company and the Optionee. As
used in this Agreement, the term "Administrator" shall refer to the committee
of the Board of Directors of the Company appointed to administer the Plan,
and if no such committee has been appointed, the term Administrator shall
mean the Board of Directors.
SECTION 14. NOTICES.
Any notice, demand or request required or permitted to be given under
this Agreement shall be in writing and shall be deemed given when delivered
personally or three (3) days after being deposited in the United States mail, as
certified or registered mail, with postage prepaid, and addressed, if to the
Company, at its principal place of business, Attention: the Chief Financial
Officer, and if to the Optionee, at his or her most recent address as shown in
the records of the Company.
SECTION 15. GOVERNING LAW.
The validity, construction, interpretation, and effect of this Option
shall be governed by and determined in accordance with the laws of the State of
California.
SECTION 16. SEVERABILITY.
Should any provision or portion of this Agreement be held to be
unenforceable or invalid for any reason, the remaining provisions and portions
of this Agreement shall be unaffected by such holding.
SECTION 17. ENTIRE AGREEMENT.
This Agreement and the Plan constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior or
contemporaneous written or oral agreements and understandings of the parties,
either express or implied. The Option evidenced hereby may, in the discretion of
the Company, also be evidenced by a certificate in such form as the Company may
approve, in which case such Option certificate and this Agreement shall evidence
one and the same Option, which shall be governed by and construed in accordance
with this Agreement and the Plan.
SECTION 18. AMENDMENT.
The Board shall have full power and authority (subject to certain
amendments requiring stockholder approval pursuant to applicable laws or
regulations) from time to time to alter, amend, suspend or terminate the Plan in
any or all respects as the Board may deem advisable. No such alteration,
amendment, suspension or termination shall be made which shall substantially
affect or impair the rights of any Optionee under an outstanding Option
Agreement without such Optionee's consent. The Board may alter or amend the Plan
to comply with requirements under the Code relating to incentive options or
other types of options which give Optionees more favorable tax treatment than
that applicable to Options granted under the Plan. Upon any such alteration or
amendment, any outstanding Option granted hereunder may, if the
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<PAGE>
Administrator so determines and if permitted by applicable law, be subject to
the more favorable tax treatment afforded to an Optionee pursuant to such
terms and conditions.
SECTION 19. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. Execution and delivery of this Agreement
or any notices, certificates or instruments contemplated herein by fax,
facsimile, or telecopier shall be deemed the execution and delivery of an
originally signed agreement, notice or instrument, as the case may be.
IN WITNESS WHEREOF, the parties have executed this Stock Option Agreement
as of the date first above written.
eSynch Corporation
By: /s/ Thomas Hemingway
-----------------------------
Name: Thomas Hemingway
---------------------------
Title: Chief Executive Officer
--------------------------
"OPTIONEE"
/s/ T. Richard Hutt
---------------------------------
(Signature)
T. Richard Hutt
(Type or print name)
9
<PAGE>
Exhibit 4.5
ESYNCH CORPORATION
STOCK OPTION AGREEMENT
TYPE OF OPTION (CHECK ONE): [ X ] INCENTIVE [ ] NONQUALIFIED
This Stock Option Agreement (the "Agreement") is entered into as of March
1, 2000, by and between eSynch Corporation, a Delaware corporation (the
"Company") and David Lyons (the "Optionee"). On April 24, 1998, the Optionee
was awarded an option with a ten year term to purchase shares of the common
stock of Intermark Corporation, an entity that merged with the Company
("Intermark")(the "Intermark Option") pursuant to Intermark's 1997 Stock
Incentive Plan (the "Plan").
This Agreement reflects the conversion of the shares underlying the
Intermark Option into shares of the Company's common stock pursuant to the
Company's merger with Intermark and replaces any agreement that may have been
entered into between the Optionee and Intermark with respect to the Intermark
Option.
SECTION 1. GRANT OF OPTION.
The Company hereby grants to Optionee an option (the "Option") to
purchase all or any portion of a total of Eleven Thousand Seven Hundred (11,700)
shares (the "Shares") of the Common Stock of the Company at a purchase price of
Twenty One and 4/10ths Cents ($0.214) per share (the "Exercise Price"), subject
to the terms and conditions set forth herein and the provisions of the Plan. If
the box marked "Incentive" above is checked, then this Option is intended to
qualify as an "incentive stock option" as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). If this Option fails in whole or
in part to qualify as an incentive stock option, or if the box marked
"Nonqualified" is checked, then this Option shall to that extent constitute a
nonqualified stock option.
SECTION 2. VESTING OF OPTION.
The right to exercise this Option shall vest immediately and this Option
shall be exercisable in whole or in part, as provided herein.
SECTION 3. TERM OF OPTION.
Optionee's right to exercise this Option shall terminate upon the first
to occur of the following:
3.1 MAXIMUM TERM.
The expiration of ten (10) years from the original date of grant (i.e.
April 24, 2008);
<PAGE>
3.2 INVOLUNTARY TERMINATION WITHOUT CAUSE.
The expiration of three (3) months from the Service Termination Date if
such termination occurs for any reason OTHER THAN permanent disability, death,
voluntary resignation or for "cause;" provided, however, that if Optionee dies
during such three-month period the provisions of subsection 3.5 below shall
apply;
3.3 VOLUNTARY RESIGNATION.
The expiration of one (1) month from the Service Termination Date if such
termination occurs due to voluntary resignation; provided, however, that if
Optionee dies during such one-month period the provisions of subsection 3.5
below shall apply;
3.4 PERMANENT DISABILITY.
The expiration of one (1) year from the Service Termination Date if such
termination is due to permanent disability of the Optionee (as defined in
Section 22(e)(3) of the Code);
3.5 DEATH.
The expiration of one (1) year from the Service Termination Date if such
termination is due to Optionee's death or if death occurs during either the
three-month or one-month period following the Service Termination Date pursuant
to subsection 3.2 or subsection 3.3 above, as the case may be;
3.6 TERMINATION FOR CAUSE.
In the event Optionee's Service is terminated by the Company for "cause,"
defined hereby to mean the performance of those acts identified in Section 2924
of the California Labor Code, then this Option, whether or not exercisable on
the Service Termination Date, shall terminate immediately and become void and of
no effect.
SECTION 4. EXERCISE OF OPTION.
4.1 PERSONS PERMITTED TO EXERCISE OPTION.
This Option may be exercised in whole or in part only by the Optionee or
by a Successor designated pursuant to Section 5 below.
4.2 NO EXERCISE AFTER TERMINATION.
This Option may not be exercised at the time of, or any time after,
termination of this Option in accordance with Section 3 above.
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4.3 MECHANICS OF EXERCISE.
Exercise of this Option shall be made by delivery of the following to the
Company at its principal executive offices:
(a) a written notice of exercise which identifies this
Agreement and states the number of Shares then being purchased (but no
fractional Shares may be purchased);
(b) a check or cash in the amount of the Exercise Price (or
payment of the Exercise Price in any manner specified in Paragraph 5.3 of
the Plan);
(c) a check or cash in the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal,
state or other applicable tax laws with respect to the taxable income, if
any, recognized by the Optionee in connection with the exercise of this
Option (unless the Company and Optionee shall have made other
arrangements for deductions or withholding from Optionee's wages, bonus
or other compensation payable to Optionee, or by the withholding of
Shares issuable upon exercise of this Option or the delivery of Shares
owned by the Optionee in accordance with the provisions of the Plan,
provided such arrangements satisfy the requirements of applicable tax
laws); and
(d) a letter, if requested by the Company, in such form and
substance as the Company may require, setting forth the investment intent
of the Optionee, or of a Successor designated pursuant to Section 5, as
the case may be.
SECTION 5. TRANSFERS ON DEATH OF OPTIONEE; RESTRICTIONS ON LIFETIME
ASSIGNMENTS.
Any attempt to sell, pledge, assign, hypothecate, transfer or dispose of
this Option in contravention of this Agreement or the Plan shall be void and
shall have no effect.
5.1 NO ASSIGNMENT OF INCENTIVE STOCK OPTIONS.
If and to the extent that this Option comprises an incentive stock
option, this Option can be assigned or transferred (subject to all other
restrictions in this Agreement) only as follows:
(a) The rights of the Optionee under this Agreement may not be
assigned or transferred except by will or by the laws of descent and
distribution,
(b) This Option may be exercised during the lifetime of the
Optionee only by such Optionee;
(c) If the Optionee's Service terminates as a result of his or
her death, Optionee's legal representative, his or her legatee, or the
person who acquired the right to exercise this Option by reason of the
death of the Optionee (with regard to incentive
3
<PAGE>
stock options, each individually, a "Successor") shall succeed to the
Optionee's rights and obligations under this Agreement; and
(d) After the death of the Optionee, only a Successor may
exercise this Option.
In the context of incentive stock options, the term "Successor" refers to
each of the transferees, successors or assigns described in this subsection 5.1.
5.2 LIMITED ASSIGNABILITY OF NONQUALIFIED STOCK OPTIONS.
If and to the extent that this Option comprises a nonqualified stock
option, this Option can be assigned or transferred (subject to all other
restrictions in this Agreement) only as follows:
(a) The rights of the Optionee under this Agreement may be
assigned or transferred by will or by the laws of descent and
distribution, and Optionee's legal representative, his or her legatee, or
the person who acquired the right to exercise this Option by reason of
the death of the Optionee shall succeed to the Optionee's rights and
obligations under this Agreement, and
(b) The rights of the Optionee under this Agreement also may be
assigned and transferred by the Optionee for estate planning purposes to
members of the immediate family of the Optionee, including for this
purpose, but not limited to, spouses, parents, descendants, brothers and
sisters, or to trusts established for the benefit of such persons.
In the context of nonqualified stock options, the term "Successor" refers
to each of the transferees, successors or assigns described in this subsection
5.2.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
6.1 INVESTMENT INTENT AS TO OPTIONS.
Optionee represents and warrants that this Option is being acquired by
Optionee for Optionee's personal account, for investment purposes only, and not
with a view to the distribution, resale or other disposition thereof.
6.2 INVESTMENT INTENT AS TO SHARES.
Optionee acknowledges that the Company may issue Shares upon the exercise
of the Option without registering such Shares under the Securities Act of 1933,
as amended (the "Act"), on the basis of certain exemptions from such
registration requirement. Accordingly, Optionee agrees that his or her exercise
of the Option may be expressly conditioned upon his or her delivery to the
Company of an investment certificate and agreement including such
representations and undertakings as the Company may reasonably require in order
to assure the availability of such exemptions, including representations,
warranties and agreements that:
4
<PAGE>
(a) The Optionee is purchasing the Shares solely for the
Optionee's own account for investment and not with a view to or for sale
or distribution of the Shares or any portion thereof and not with any
present intention of selling, offering to sell or otherwise disposing of
or distributing the Shares or any portion thereof. The Optionee also
represents that the entire legal and beneficial interest of the Shares
the Optionee is purchasing is being purchased for, and will be held for
the account of, the Optionee only and neither in whole nor in part for
any other person.
(b) The Optionee has discussed the Company and its plans,
operations and financial condition with its officers and that the
Optionee has received all such information as the Optionee deems
necessary and appropriate to enable the Optionee to evaluate the
financial risk inherent in making an investment in the Shares of the
Company, and has received satisfactory and complete information
concerning the business and financial condition of the Company in
response to all inquiries in respect thereof.
(c) The Optionee realizes that the purchase of the Shares will
be a highly speculative investment.
(d) The Optionee is able, without impairing the Optionee's
financial condition, to hold the Shares for an indefinite period of time
and to suffer a complete loss on the investment.
(e) The Optionee acknowledges that he is aware that the Shares
to be issued to him by the Company pursuant to this Agreement have not
been registered under the Act, and
(i) The Shares must be held indefinitely unless a
transfer of them is subsequently registered under the Act or an
exemption from such registration is available;
(ii) The share certificate(s) representing the Shares
will be stamped with the legends restricting transfer as specified
in this Agreement; and
(iii) The Company will make a notation in its records of
the aforementioned restrictions on transfer and legends as
described in this Agreement.
(f) The Optionee understands that the Shares are restricted
securities within the meaning of Rule 144 promulgated under the Act; that
the exemption from registration under Rule 144 will not be available in
any event for at least one year from the date of sale of the Shares to
the Optionee, and even then will not be available unless (i) a public
trading market then exists for the Shares of the Company, (ii) adequate
current public information concerning the Company is then available to
the public, (iii) the Optionee has been the beneficial owner and the
Optionee has paid the full purchase price for the Shares at least one
year prior to the sale, and (iv) the other terms and conditions of Rule
144 are
5
<PAGE>
complied with; and that any sale of the Shares may be made by it
only in limited amounts in accordance with such terms and conditions of
Rule 144, as amended from time to time.
(g) Without in any way limiting any of the other provisions of
this Agreement, Optionee's further agreement that the Optionee shall in
no event make any disposition of all or any portion of the Shares which
the Optionee is purchasing unless and until:
(i) There is then in effect a registration statement
under the Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(ii) (A) the Optionee shall have notified the Company of
the proposed disposition and shall have furnished the Company with
a detailed statement of the circumstances surrounding the proposed
disposition, (B) the Optionee shall have furnished the Company
with an opinion of counsel to the effect that such disposition
will not require registration of such shares under the Act, and
(C) such opinion of counsel shall have been concurred with by
counsel for the Company and the Company shall have advised the
Optionee of such concurrence.
(h) The Optionee acknowledges that the Optionee has been
furnished with a copy of the Plan, has read the Plan and this Agreement,
and understands that all rights and obligations connected with this
Agreement are set forth in this Agreement and in the Plan.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE.
In the event that the outstanding shares of Common Stock of the Company
are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of a recapitalization, stock split, combination of shares, reclassification,
stock dividend or other similar change in the capital structure of the Company,
then appropriate adjustments shall be made by the Administrator to the number
and kind of Shares subject to the unexercised portion of this Option and to the
Exercise Price per share, in order to preserve, as nearly as practical, but not
to increase, the benefits of the Optionee under this Option, in accordance with
the provisions of the Plan. No fractional share shall be issued under this
Option or upon any such adjustment.
SECTION 8. NO CREATION OR ENLARGEMENT OF OPTIONEE'S RIGHTS TO
CONTINUE IN ANY CAPACITY.
The right of the Company and any Affiliated Company to terminate at will
the Optionee's services to the Company or any Affiliated Company at any time
(whether by dismissal, discharge or otherwise), with or without cause, is
specifically reserved. Nothing in this Agreement shall diminish or impair in any
manner whatsoever the right or power of the Company or any Affiliated Company to
terminate the Optionee's Service for any reason, with or without cause.
6
<PAGE>
SECTION 9. RIGHTS AS STOCKHOLDER.
The Optionee (or transferee of this option by will or by the laws of
descent and distribution) shall have no rights as a stockholder with respect to
any Shares covered by this Option until the date of the issuance of a stock
certificate or certificates to him or her for such Shares, notwithstanding the
exercise of this Option.
SECTION 10. "MARKET STAND-OFF" AGREEMENT.
Optionee agrees that, if requested by the Company or the managing
underwriter of any proposed public offering of the Company's securities,
Optionee will not sell or otherwise transfer or dispose of any Shares held by
Optionee without the prior written consent of the Company or such underwriter,
as the case may be, during such period of time, not to exceed 180 days following
the effective date of the registration statement filed by the Company with
respect to such offering, as the Company or the underwriter may specify.
SECTION 11. RESTRICTIVE LEGENDS.
In addition to all other legends that the Company or its legal counsel
consider appropriate under applicable securities laws, the certificates
representing any Shares purchased pursuant to this Agreement shall bear
substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY SECURITIES
ISSUABLE ON EXERCISE OR WITH RESPECT TO ANY OTHER RIGHT CONNECTED
HEREWITH) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY
HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT AS MAY
BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. IN ADDITION ANY TRANSFEREE OR ISSUEE
OF SUCH SECURITIES MAY BE REQUIRED TO PROVIDE APPROPRIATE INVESTMENT
REPRESENTATIONS PRIOR TO ANY SUCH TRANSFER OR ISSUANCE.
SECTION 12. STOP-TRANSFER NOTICES.
Optionee understands and agrees that, in order to ensure compliance
with the restrictions referred to herein, the Company may issue appropriate
"stop-transfer" instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.
SECTION 13. INTERPRETATION.
This Option is granted pursuant to the terms of the Plan, and shall in
all respects be interpreted in accordance therewith. The Administrator shall
interpret and construe this Option and the Plan, and any action, decision,
interpretation or determination made in good faith by the
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<PAGE>
Administrator shall be final and binding on the Company and the Optionee. As
used in this Agreement, the term "Administrator" shall refer to the committee
of the Board of Directors of the Company appointed to administer the Plan,
and if no such committee has been appointed, the term Administrator shall
mean the Board of Directors.
SECTION 14. NOTICES.
Any notice, demand or request required or permitted to be given under
this Agreement shall be in writing and shall be deemed given when delivered
personally or three (3) days after being deposited in the United States mail, as
certified or registered mail, with postage prepaid, and addressed, if to the
Company, at its principal place of business, Attention: the Chief Financial
Officer, and if to the Optionee, at his or her most recent address as shown in
the records of the Company.
SECTION 15. GOVERNING LAW.
The validity, construction, interpretation, and effect of this Option
shall be governed by and determined in accordance with the laws of the State of
California.
SECTION 16. SEVERABILITY.
Should any provision or portion of this Agreement be held to be
unenforceable or invalid for any reason, the remaining provisions and portions
of this Agreement shall be unaffected by such holding.
SECTION 17. ENTIRE AGREEMENT.
This Agreement and the Plan constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior or
contemporaneous written or oral agreements and understandings of the parties,
either express or implied. The Option evidenced hereby may, in the discretion of
the Company, also be evidenced by a certificate in such form as the Company may
approve, in which case such Option certificate and this Agreement shall evidence
one and the same Option, which shall be governed by and construed in accordance
with this Agreement and the Plan.
SECTION 18. AMENDMENT.
The Board shall have full power and authority (subject to certain
amendments requiring stockholder approval pursuant to applicable laws or
regulations) from time to time to alter, amend, suspend or terminate the Plan in
any or all respects as the Board may deem advisable. No such alteration,
amendment, suspension or termination shall be made which shall substantially
affect or impair the rights of any Optionee under an outstanding Option
Agreement without such Optionee's consent. The Board may alter or amend the Plan
to comply with requirements under the Code relating to incentive options or
other types of options which give Optionees more favorable tax treatment than
that applicable to Options granted under the Plan. Upon any such alteration or
amendment, any outstanding Option granted hereunder may, if the
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<PAGE>
Administrator so determines and if permitted by applicable law, be subject to
the more favorable tax treatment afforded to an Optionee pursuant to such
terms and conditions.
SECTION 19. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument. Execution and delivery of this Agreement or any
notices, certificates or instruments contemplated herein by fax, facsimile, or
telecopier shall be deemed the execution and delivery of an originally signed
agreement, notice or instrument, as the case may be.
IN WITNESS WHEREOF, the parties have executed this Stock Option Agreement
as of the date first above written.
eSynch Corporation
By: /s/ Thomas Hemingway
-------------------------------
Name: Thomas Hemingway
-----------------------------
Title: Chief Executive Officer
----------------------------
"OPTIONEE"
/s/ David Lyons
-----------------------------------
(Signature)
David Lyons
-----------------------------------
(Type or print name)
9
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Exhibit 4.6
ESYNCH CORPORATION
STOCK OPTION AGREEMENT
TYPE OF OPTION (CHECK ONE): [ X ] INCENTIVE [ ] NONQUALIFIED
This Stock Option Agreement (the "Agreement") is entered into as of April 1,
1999, by and between eSynch Corporation, a Delaware corporation (the "Company")
and Robert Way (the "Optionee") pursuant to the Employment Agreement between the
Company and the Optionee, dated April 1, 1999.
SECTION 1. GRANT OF OPTION.
The Company hereby grants to Optionee an option (the "Option") to
purchase all or any portion of a total of One Hundred Ten Thousand (110,000)
shares (the "Shares") of the Common Stock of the Company at a purchase price of
One Dollar ($1.00) per share (the "Exercise Price"), subject to the terms and
conditions set forth herein. If the box marked "Incentive" above is checked,
then this Option is intended to qualify as an "incentive stock option" as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). If this Option fails in whole or in part to qualify as an incentive
stock option, or if the box marked "Nonqualified" is checked, then this Option
shall to that extent constitute a nonqualified stock option.
SECTION 2. VESTING OF OPTION.
The right to exercise this Option shall vest immediately and this
Option shall be exercisable in whole or in part, as provided herein.
SECTION 3. TERM OF OPTION.
Optionee's right to exercise this Option shall terminate upon the first
to occur of the following:
3.1 MAXIMUM TERM.
the expiration of ten (10) years from the date of this Agreement;
3.2 INVOLUNTARY TERMINATION WITHOUT CAUSE.
the expiration of three (3) months from the Service Termination Date if
such termination occurs for any reason OTHER THAN permanent disability, death,
voluntary resignation or for "cause;" provided, however, that if Optionee dies
during such three-month period the provisions of subsection 3.5 below shall
apply;
<PAGE>
3.3 VOLUNTARY RESIGNATION.
the expiration of one (1) month from the Service Termination Date if such
termination occurs due to voluntary resignation; provided, however, that if
Optionee dies during such one-month period the provisions of subsection 3.5
below shall apply;
3.4 PERMANENT DISABILITY.
the expiration of one (1) year from the Service Termination Date if such
termination is due to permanent disability of the Optionee (as defined in
Section 22(e)(3) of the Code);
3.5 DEATH.
the expiration of one (1) year from the Service Termination Date if such
termination is due to Optionee's death or if death occurs during either the
three-month or one-month period following the Service Termination Date pursuant
to subsection 3.2 or subsection 3.3 above, as the case may be;
3.6 TERMINATION FOR CAUSE.
in the event Optionee's Service is terminated by the Company for "cause,"
defined hereby to mean the performance of those acts identified in Section 2924
of the California Labor Code, then this Option, whether or not exercisable on
the Service Termination Date, shall terminate immediately and become void and of
no effect.
SECTION 4. EXERCISE OF OPTION.
4.1 PERSONS PERMITTED TO EXERCISE OPTION.
This Option may be exercised in whole or in part only by the Optionee or
by a Successor designated pursuant to Section 5 below.
4.2 NO EXERCISE AFTER TERMINATION.
This Option may not be exercised at the time of, or any time after,
termination of this Option in accordance with Section 3 above.
4.3 MECHANICS OF EXERCISE.
Exercise of this Option shall be made by delivery of the following to the
Company at its principal executive offices:
(a) a written notice of exercise which identifies this
Agreement and states the number of Shares then being purchased (but no
fractional Shares may be purchased);
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<PAGE>
(b) payment in the amount of the Exercise Price, by: (a) cash;
(b) check; (c) the surrender of shares of Common Stock owned by the
Optionee that have been held by the Optionee for at least six (6) months,
which surrendered shares shall be valued at Fair Market Value as of the
date of such exercise; (d) the Optionee's promissory note; (e) the
cancellation of indebtedness of the Company to the Optionee; (f) the
waiver of compensation due or accrued to the Optionee for services
rendered; (g) provided that a public market for the Common Stock exists,
a "same day sale" commitment from the Optionee and an NASD Dealer whereby
the Optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay the Exercise Price and whereby
the NASD Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; (h) provided that a
public market for the Common Stock exists, a "margin" commitment from
the Optionee and an NASD Dealer whereby the Optionee irrevocably elects
to exercise the Option and to pledge the shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in
the amount of the Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such shares to forward the Exercise Price
directly to the Company; or (i) any combination of the foregoing methods
of payment or any other consideration or method of payment as shall be
permitted by applicable corporate law;
(c) a check or cash in the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal,
state or other applicable tax laws with respect to the taxable income, if
any, recognized by the Optionee in connection with the exercise of this
Option (unless the Company and Optionee shall have made other
arrangements for deductions or withholding from Optionee's wages, bonus
or other compensation payable to Optionee, or by the withholding of
Shares issuable upon exercise of this Option or the delivery of Shares
owned by the Optionee, provided such arrangements satisfy the
requirements of applicable tax laws); and
(d) a letter, if requested by the Company, in such form and
substance as the Company may require, setting forth the investment intent
of the Optionee, or of a Successor designated pursuant to Section 5, as
the case may be.
SECTION 5. TRANSFERS ON DEATH OF OPTIONEE; RESTRICTIONS ON LIFETIME
ASSIGNMENTS.
Any attempt to sell, pledge, assign, hypothecate, transfer or dispose of
this Option in contravention of this Agreement shall be void and shall have no
effect.
5.1 NO ASSIGNMENT OF INCENTIVE STOCK OPTIONS.
If and to the extent that this Option comprises an incentive stock
option, this Option can be assigned or transferred (subject to all other
restrictions in this Agreement) only as follows:
(a) the rights of the Optionee under this Agreement may not be
assigned or transferred except by will or by the laws of descent and
distribution,
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(b) this Option may be exercised during the lifetime of the
Optionee only by such Optionee;
(c) if the Optionee's Service terminates as a result of his or
her death, Optionee's legal representative, his or her legatee, or the
person who acquired the right to exercise this Option by reason of the
death of the Optionee (with regard to incentive stock options, each
individually, a "Successor") shall succeed to the Optionee's rights and
obligations under this Agreement; and
(d) after the death of the Optionee, only a Successor may
exercise this Option.
In the context of incentive stock options, the term "Successor" refers to
each of the transferees, successors or assigns described in this subsection 5.1.
5.2 LIMITED ASSIGNABILITY OF NONQUALIFIED STOCK OPTIONS.
If and to the extent that this Option comprises a nonqualified stock
option, this Option can be assigned or transferred (subject to all other
restrictions in this Agreement) only as follows:
(a) the rights of the Optionee under this Agreement may be
assigned or transferred by will or by the laws of descent and
distribution, and Optionee's legal representative, his or her legatee, or
the person who acquired the right to exercise this Option by reason of
the death of the Optionee shall succeed to the Optionee's rights and
obligations under this Agreement, and
(b) the rights of the Optionee under this Agreement also may be
assigned and transferred by the Optionee for estate planning purposes to
members of the immediate family of the Optionee, including for this
purpose, but not limited to, spouses, parents, descendants, brothers and
sisters, or to trusts established for the benefit of such persons.
In the context of nonqualified stock options, the term "Successor" refers
to each of the transferees, successors or assigns described in this subsection
5.2.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
6.1 INVESTMENT INTENT AS TO OPTIONS.
Optionee represents and warrants that this Option is being acquired by
Optionee for Optionee's personal account, for investment purposes only, and not
with a view to the distribution, resale or other disposition thereof.
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<PAGE>
6.2 INVESTMENT INTENT AS TO SHARES.
Optionee acknowledges that the Company may issue Shares upon the exercise
of the Option without registering such Shares under the Securities Act of 1933,
as amended (the "Act"), on the basis of certain exemptions from such
registration requirement. Accordingly, Optionee agrees that his or her exercise
of the Option may be expressly conditioned upon his or her delivery to the
Company of an investment certificate and agreement including such
representations and undertakings as the Company may reasonably require in order
to assure the availability of such exemptions, including representations,
warranties and agreements that:
(a) The Optionee is purchasing the Shares solely for the
Optionee's own account for investment and not with a view to or for sale
or distribution of the Shares or any portion thereof and not with any
present intention of selling, offering to sell or otherwise disposing of
or distributing the Shares or any portion thereof. The Optionee also
represents that the entire legal and beneficial interest of the Shares
the Optionee is purchasing is being purchased for, and will be held for
the account of, the Optionee only and neither in whole nor in part for
any other person.
(b) The Optionee has discussed the Company and its plans,
operations and financial condition with its officers and that the
Optionee has received all such information as the Optionee deems
necessary and appropriate to enable the Optionee to evaluate the
financial risk inherent in making an investment in the Shares of the
Company, and has received satisfactory and complete information
concerning the business and financial condition of the Company in
response to all inquiries in respect thereof.
(c) The Optionee realizes that the purchase of the Shares will
be a highly speculative investment.
(d) The Optionee is able, without impairing the Optionee's
financial condition, to hold the Shares for an indefinite period of time
and to suffer a complete loss on the investment.
(e) The Optionee acknowledges that he is aware that the Shares
to be issued to him by the Company pursuant to this Agreement have not
been registered under the Act, and
(i) the Shares must be held indefinitely unless a
transfer of them is subsequently registered under the Act or an
exemption from such registration is available;
(ii) the share certificate(s) representing the Shares
will be stamped with the legends restricting transfer as specified
in this Agreement; and
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<PAGE>
(iii) the Company will make a notation in its records of
the aforementioned restrictions on transfer and legends as
described in this Agreement.
(f) The Optionee understands that the Shares are restricted
securities within the meaning of Rule 144 promulgated under the Act; that
the exemption from registration under Rule 144 will not be available in
any event for at least one year from the date of sale of the Shares to
the Optionee, and even then will not be available unless (i) a public
trading market then exists for the Shares of the Company, (ii) adequate
current public information concerning the Company is then available to
the public, (iii) the Optionee has been the beneficial owner and the
Optionee has paid the full purchase price for the Shares at least one
year prior to the sale, and (iv) the other terms and conditions of Rule
144 are complied with; and that any sale of the Shares may be made by it
only in limited amounts in accordance with such terms and conditions of
Rule 144, as amended from time to time.
(g) Without in any way limiting any of the other provisions of
this Agreement, Optionee's further agreement that the Optionee shall in
no event make any disposition of all or any portion of the Shares which
the Optionee is purchasing unless and until:
(i) there is then in effect a registration statement
under the Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(ii) (A) the Optionee shall have notified the Company of
the proposed disposition and shall have furnished the Company with
a detailed statement of the circumstances surrounding the proposed
disposition, (B) the Optionee shall have furnished the Company
with an opinion of counsel to the effect that such disposition
will not require registration of such shares under the Act, and
(C) such opinion of counsel shall have been concurred with by
counsel for the Company and the Company shall have advised the
Optionee of such concurrence.
(h) The Optionee acknowledges that the Optionee has read this
Agreement, and understands that all rights and obligations connected with
this Agreement are set forth in this Agreement.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE.
In the event that the outstanding shares of Common Stock of the Company
are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of a recapitalization, stock split, combination of shares, reclassification,
stock dividend or other similar change in the capital structure of the Company,
then appropriate adjustments shall be made to the number and kind of Shares
subject to the unexercised portion of this Option and to the Exercise Price per
share, in order to preserve, as nearly as practical, but not to increase, the
benefits of the Optionee under this Option. No fractional share shall be issued
under this Option or upon any such adjustment.
6
<PAGE>
SECTION 8. NO CREATION OR ENLARGEMENT OF OPTIONEE'S RIGHTS TO
CONTINUE IN ANY CAPACITY.
The right of the Company to terminate at will the Optionee's services to
the Company at any time (whether by dismissal, discharge or otherwise), with or
without cause, is specifically reserved. Nothing in this Agreement shall
diminish or impair in any manner whatsoever the right or power of the Company to
terminate the Optionee's Service for any reason, with or without cause.
SECTION 9. RIGHTS AS STOCKHOLDER.
The Optionee (or transferee of this option by will or by the laws of
descent and distribution) shall have no rights as a stockholder with respect to
any Shares covered by this Option until the date of the issuance of a stock
certificate or certificates to him or her for such Shares, notwithstanding the
exercise of this Option.
SECTION 10. "MARKET STAND-OFF" AGREEMENT.
Optionee agrees that, if requested by the Company or the managing
underwriter of any proposed public offering of the Company's securities,
Optionee will not sell or otherwise transfer or dispose of any Shares held by
Optionee without the prior written consent of the Company or such underwriter,
as the case may be, during such period of time, not to exceed 180 days following
the effective date of the registration statement filed by the Company with
respect to such offering, as the Company or the underwriter may specify.
SECTION 11. RESTRICTIVE LEGENDS.
In addition to all other legends that the Company or its legal counsel
consider appropriate under applicable securities laws, the certificates
representing any Shares purchased pursuant to this Agreement shall bear
substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY SECURITIES
ISSUABLE ON EXERCISE OR WITH RESPECT TO ANY OTHER RIGHT CONNECTED
HEREWITH) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY
HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT AS MAY
BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. IN ADDITION ANY TRANSFEREE OR ISSUEE
OF SUCH SECURITIES MAY BE REQUIRED TO PROVIDE APPROPRIATE INVESTMENT
REPRESENTATIONS PRIOR TO ANY SUCH TRANSFER OR ISSUANCE.
7
<PAGE>
SECTION 12. STOP-TRANSFER NOTICES.
Optionee understands and agrees that, in order to ensure compliance
with the restrictions referred to herein, the Company may issue appropriate
"stop-transfer" instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.
SECTION 13. NOTICES.
Any notice, demand or request required or permitted to be given under
this Agreement shall be in writing and shall be deemed given when delivered
personally or three (3) days after being deposited in the United States mail, as
certified or registered mail, with postage prepaid, and addressed, if to the
Company, at its principal place of business, Attention: the Chief Financial
Officer, and if to the Optionee, at his or her most recent address as shown in
the records of the Company.
SECTION 14. GOVERNING LAW.
The validity, construction, interpretation, and effect of this Option
shall be governed by and determined in accordance with the laws of the State of
California.
SECTION 15. SEVERABILITY.
Should any provision or portion of this Agreement be held to be
unenforceable or invalid for any reason, the remaining provisions and portions
of this Agreement shall be unaffected by such holding.
SECTION 16. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior or contemporaneous
written or oral agreements and understandings of the parties, either express or
implied. The Option evidenced hereby may, in the discretion of the Company, also
be evidenced by a certificate in such form as the Company may approve, in which
case such Option certificate and this Agreement shall evidence one and the same
Option, which shall be governed by and construed in accordance with this
Agreement.
SECTION 17. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument. Execution and delivery of this Agreement or any
notices, certificates or instruments contemplated herein by fax, facsimile, or
telecopier shall be deemed the execution and delivery of an originally signed
agreement, notice or instrument, as the case may be.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Stock Option Agreement
as of the date first above written.
eSynch Corporation
By: /s/ Thomas Hemingway
---------------------------------
Name: Thomas Hemingway
-------------------------------
Title: Chief Executive Officer
------------------------------
"OPTIONEE"
/s/ Robert Way
-------------------------------------
(Signature)
Robert Way
-------------------------------------
(Type or print name)
9
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Exhibit 4.7
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED OR DISPOSED OF IN THE ABSENCE
OF A REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER THE ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND APPLICABLE QUALIFICATION
REQUIREMENTS UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO
REGULATION S AS PROMULGATED UNDER THE ACT.
THIS WARRANT WILL BE VOID AND OF NO VALUE UNLESS EXERCISED WITHIN THE LIMITS
HEREIN PROVIDED
ESYNCH CORPORATION
(a Delaware corporation)
WARRANT FOR THE PURCHASE OF 150,000 COMMON SHARES
WITH REGISTRATION RIGHTS
THIS IS TO CERTIFY THAT, for value received, Donald C. Watters, or his permitted
successors or assigns (the "Holder") is entitled to subscribe for and purchase
one hundred fifty thousand (150,000) fully paid and non-assessable common shares
(the "Common Shares") of eSynch Corporation (the "Company"), par value $.001 per
share, at an Exercise Price per Share of $0.50 (the "Exercise Price") per share.
This Warrant is exercisable at any time up to 4:30 P.M. Pacific time on January
25, 2009 (the "Date of Expiration") subject, however, to the provisions and upon
the terms and conditions hereinafter set forth.
The rights represented by this Warrant may be exercised by the Holder, in whole
or in part (but not as to a fractional Share), by surrender of this Warrant at
the office of the Company's transfer agent, or the principal executive office of
the Company if it is acting as its own transfer agent, during its normal
business hours, together with the subscription form attached hereto completed
and signed by the Holder and, in payment of the Exercise Price for the number of
Common Shares subscribed, (a) cash; (b) a certified check payable to or to the
order of the Company; (c) the surrender of shares of Common Stock owned by the
Holder that have been held by the Holder for at least six (6) months, which
surrendered shares shall be valued at Fair Market Value as of the date of such
exercise; (d) the Holder's promissory note; (e) the cancellation of indebtedness
of the Company to the Holder; (f) the waiver of compensation due or accrued to
the Holder for services rendered; (g) provided that a public market for the
Common Stock exists, a "same day sale" commitment from the Holder and an NASD
Dealer whereby the Holder irrevocably elects to exercise the Warrant and to sell
a portion of the shares so purchased to pay the Exercise Price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; (h) provided that a public market for
the Common
<PAGE>
Stock exists, a "margin" commitment from the Holder and an NASD Dealer
whereby the Holder irrevocably elects to exercise the Warrant and to pledge
the shares so purchased to the NASD Dealer in a margin account as security
for a loan from the NASD Dealer in the amount of the Exercise Price, and
whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; or (i) any combination of
the foregoing methods of payment or any other consideration or method of
payment as shall be permitted by applicable corporate law.
Upon the exercise of the rights represented by this Warrant and payment of the
Exercise Price in accordance with the terms hereof, the Common Shares for which
the Holder has subscribed and purchased shall be deemed to have been issued and
the Holder shall be deemed to have become the holder of record of such shares on
the date of such exercise and payment.
In the event of any exercise of the rights represented by this Warrant,
certificates for the Common Shares so purchased shall be delivered to the Holder
within a reasonable time, not exceeding ten days after the rights represented by
this Warrant have been duly exercised and, unless this Warrant has expired, a
new Warrant representing the number of Common Shares, if any, with respect to
which this Warrant shall not then have been exercised shall also be issued to
the Holder within such time.
The Company covenants and agrees that the Common Shares which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
fully paid and non-assessable and free of all liens, charges and encumbrances.
The Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved, a sufficient number of common shares to
provide for the exercise of the rights represented by this Warrant.
THE FOLLOWING ARE THE TERMS AND CONDITIONS
REFERRED TO IN THIS WARRANT
1. In case the Company shall at any time subdivide its outstanding common
shares into a greater number of shares, the Exercise Price shall be
proportionately reduced and the number of subdivided Common Shares entitled to
be purchased proportionately increased, and conversely, in case the outstanding
common shares of the Company shall be consolidated into a smaller number of
shares, the Exercise Price shall be proportionately increased and the number of
consolidated common shares entitled to be purchased hereunder shall be
proportionately decreased.
If any capital reorganization or reclassification of the capital stock of
the Company, or the merger, amalgamation or arrangement of the Company with
another corporation shall be effected, then as a condition of such
reorganization, reclassification, merger, amalgamation or arrangement, adequate
provision shall be made whereby the Holder shall have the right to purchase and
receive upon the basis and upon the terms and conditions specified in this
Warrant and in lieu of the Common Shares immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such shares of
stock, or other securities as may be issued with respect to or in exchange for
such number of outstanding Common Shares equal to the number of Common Shares
purchasable and receivable upon the exercise of this Warrant had such
reorganization, reclassification, merger, amalgamation or arrangement not taken
place. The Company shall not effect any merger, amalgamation or arrangement
unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such merger, amalgamation
or arrangement assumes by written instrument executed and mailed or delivered to
the Holder of this Warrant the obligation to deliver to such Holder
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such shares of stock or securities in accordance with the foregoing
provisions as such Holder may be entitled to purchase.
2. In case at any time:
(a) the Company shall pay any dividend payable in stock upon its
common shares or make any distribution to the holders of its
common shares;
(b) the Company shall offer for subscription pro rata to the Holders
of its common shares any additional shares of stock of any class
or other rights;
(c) there shall be any subdivision, consolidation, capital
reorganization, or reclassification of the capital stock of the
Company, or merger, amalgamation or arrangement of the Company
with, or sale of all or substantially all of its assets to,
another corporation; or
(d) there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
then, and in any one or more of such cases, the Company shall give to the Holder
of this Warrant, at least twenty days prior written notice of the date on which
the books of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights, or for determining rights to vote
with respect to such subdivision, consolidation, reorganization,
reclassification, merger, amalgamation, arrangement, dissolution, liquidation or
winding-up and in the case of any such subdivision, consolidation,
reorganization, reclassification, merger, amalgamation, arrangement, sale,
dissolution, liquidation or winding-up, at least twenty days' prior written
notice of the date when the same shall take place. Such notice in accordance
with the foregoing clause, shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Shares shall be entitled thereto, and such notice in accordance with the
foregoing shall also specify the date on which the holders of Common Shares
shall be entitled to exchange their Common Shares for securities or other
property deliverable upon such subdivision, consolidation, reorganization,
reclassification, merger, amalgamation, arrangement, sale, dissolution,
liquidation or winding-up as the case may be. Each such written notice shall be
given by first class mail, registered postage prepaid, addressed to the Holder
of this Warrant at the address of such holder, as shown on the books of the
Company.
3. As used in this section, the term "Common Shares" shall mean and include
the Company's presently authorized shares of Common Stock, $.001 par value, and
shall also include any capital stock of any class of the Company hereafter
authorized which shall not be limited to a fixed sum or percentage in respect of
the rights of the holders thereof to participate in dividends and in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding-up of the Company.
4. This Warrant shall not entitle the Holder to any rights as a shareholder
of the Company, including without limitation, voting rights, except that the
Company shall concurrently furnish to the Holder a copy of all notices which are
furnished to holders of the common shares.
5. This Warrant is not transferable except pursuant to an exemption from
registration and qualification requirements in accordance with federal and
applicable state or other securities laws.
6. This Warrant and any Common Shares acquired pursuant to this Warrant will
be subject to restrictions under federal and applicable state or other
securities laws and shall bear substantially the
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following legend, and all other legends as may from time to time be required
by any then applicable securities laws:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED
OR DISPOSED OF IN THE ABSENCE OF A REGISTRATION STATEMENT AND
QUALIFICATION IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE
ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION
FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS UNDER
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO
REGULATION S AS PROMULGATED UNDER THE ACT.
7. This Warrant is exchangeable upon its surrender by the Holder at the
Company's principal office, for new Warrants of like tenor representing in the
aggregate the right to subscribe for and purchase the number of shares which may
be subscribed for and purchased hereunder, each of such new Warrants to
represent the right to subscribe for and purchase such number of Common Shares
as shall be designated by the Holder at the time of such surrender.
8. Any notice or other communication required to be given by the Company
under this Warrant, whether to the Holder or otherwise, shall be delivered or
telecopied as follows:
Donald Watters
10962 Lake Court Road
Santa Ana, CA 92705
Any notice or other communication so given shall be deemed to have been
given and received when delivered, if delivered, and upon transmission, if
telecopied, and if the date of such transmission is not a business day, on the
next ensuing business day.
9. Time is of the essence hereof.
10. This Warrant shall be governed by and construed in accordance with the
laws of the State of California.
11. The Common Shares purchaseable upon exercise of this Warrant shall be
subject to the registration rights set forth in the Registration Rights
Agreement between the individual and the Company.
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eSynch Corporation has caused this Warrant to be signed by its duly authorized
officers.
ESYNCH CORPORATION
Date: January 25, 1999
By: /s/ Thomas Hemingway
------------------------------------
Thomas Hemingway, Chairman, CEO
By: /s/ T. Richard Hutt
------------------------------------
T. Richard Hutt, Secretary/Treasurer
5
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SUBSCRIPTION FORM
TO:
_________________________, the holder of the within Share Purchase Warrant (the
"Warrant"), subscribes for __________ of the common shares of referred to in the
Warrant (the "Common Shares") according to the conditions thereof, and herewith
makes payment of the Exercise Price in full for the said number of shares at the
rate of $_____ per share by a certified check in the amount of $__________ is
enclosed herewith for such payment.
The undersigned hereby directs that the shares hereby subscribed for be issued
and delivered as follows:
NAME ADDRESS
- ----------------------------- -----------------------------
-----------------------------
-----------------------------
DATED at ____________________ this _____ day of ____________________, _____.
-----------------------------
Signature of Holder
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Exhibit 4.8
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED OR DISPOSED OF IN THE ABSENCE
OF A REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER THE ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND APPLICABLE QUALIFICATION
REQUIREMENTS UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO
REGULATION S AS PROMULGATED UNDER THE ACT.
THIS WARRANT WILL BE VOID AND OF NO VALUE UNLESS EXERCISED WITHIN THE LIMITS
HEREIN PROVIDED
ESYNCH CORPORATION
(a Delaware corporation)
WARRANT FOR THE PURCHASE OF 150,000 COMMON SHARES
WITH REGISTRATION RIGHTS
THIS IS TO CERTIFY THAT, for value received, David P. Noyes, or his permitted
successors or assigns (the "Holder") is entitled to subscribe for and purchase
one hundred fifty thousand (150,000) fully paid and non-assessable common shares
(the "Common Shares") of eSynch Corporation (the "Company"), par value $.001 per
share, at an Exercise Price per Share of $1.00 (the "Exercise Price") per share.
This Warrant is exercisable at any time up to 4:30 P.M. Pacific time on January
25, 2009 (the "Date of Expiration") subject, however, to the provisions and upon
the terms and conditions hereinafter set forth.
The rights represented by this Warrant may be exercised by the Holder, in whole
or in part (but not as to a fractional Share), by surrender of this Warrant at
the office of the Company's transfer agent, or the principal executive office of
the Company if it is acting as its own transfer agent, during its normal
business hours, together with the subscription form attached hereto completed
and signed by the Holder and, in payment of the Exercise Price for the number of
Common Shares subscribed, (a) cash; (b) a certified check payable to or to the
order of the Company; (c) the surrender of shares of Common Stock owned by the
Holder that have been held by the Holder for at least six (6) months, which
surrendered shares shall be valued at Fair Market Value as of the date of such
exercise; (d) the Holder's promissory note; (e) the cancellation of indebtedness
of the Company to the Holder; (f) the waiver of compensation due or accrued to
the Holder for services rendered; (g) provided that a public market for the
Common Stock exists, a "same day sale" commitment from the Holder and an NASD
Dealer whereby the Holder irrevocably elects to exercise the Warrant and to sell
a portion of the shares so purchased to pay the Exercise Price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; (h) provided that a public market for
the Common Stock exists, a "margin" commitment from the Holder and an NASD
Dealer whereby the Holder
<PAGE>
irrevocably elects to exercise the Warrant and to pledge the shares so
purchased to the NASD Dealer in a margin account as security for a loan from
the NASD Dealer in the amount of the Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; or (i) any combination of the
foregoing methods of payment or any other consideration or method of payment
as shall be permitted by applicable corporate law.
Upon the exercise of the rights represented by this Warrant and payment of the
Exercise Price in accordance with the terms hereof, the Common Shares for which
the Holder has subscribed and purchased shall be deemed to have been issued and
the Holder shall be deemed to have become the holder of record of such shares on
the date of such exercise and payment.
In the event of any exercise of the rights represented by this Warrant,
certificates for the Common Shares so purchased shall be delivered to the Holder
within a reasonable time, not exceeding ten days after the rights represented by
this Warrant have been duly exercised and, unless this Warrant has expired, a
new Warrant representing the number of Common Shares, if any, with respect to
which this Warrant shall not then have been exercised shall also be issued to
the Holder within such time.
The Company covenants and agrees that the Common Shares which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
fully paid and non-assessable and free of all liens, charges and encumbrances.
The Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved, a sufficient number of common shares to
provide for the exercise of the rights represented by this Warrant.
THE FOLLOWING ARE THE TERMS AND CONDITIONS
REFERRED TO IN THIS WARRANT
1. In case the Company shall at any time subdivide its outstanding common
shares into a greater number of shares, the Exercise Price shall be
proportionately reduced and the number of subdivided Common shares entitled to
be purchased proportionately increased, and conversely, in case the outstanding
Common Shares of the Company shall be consolidated into a smaller number of
shares, the Exercise Price shall be proportionately increased and the number of
consolidated Common Shares entitled to be purchased hereunder shall be
proportionately decreased.
If any capital reorganization or reclassification of the capital stock of
the Company, or the merger, amalgamation or arrangement of the Company with
another corporation shall be effected, then as a condition of such
reorganization, reclassification, merger, amalgamation or arrangement, adequate
provision shall be made whereby the Holder shall have the right to purchase and
receive upon the basis and upon the terms and conditions specified in this
Warrant and in lieu of the Common Shares immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such shares of
stock, or other securities as may be issued with respect to or in exchange for
such number of outstanding Common Shares equal to the number of Common Shares
purchasable and receivable upon the exercise of this Warrant had such
reorganization, reclassification, merger, amalgamation or arrangement not taken
place. The Company shall not effect any merger, amalgamation or arrangement
unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such merger, amalgamation
or arrangement assumes by written instrument executed and mailed or delivered to
the Holder of this Warrant the obligation to deliver to such Holder such shares
of stock or securities in accordance with the foregoing provisions as such
Holder may be entitled to purchase.
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2. In case at any time:
(a) the Company shall pay any dividend payable in stock upon its
Common Shares or make any distribution to the holders of its
Common Shares;
(b) the Company shall offer for subscription pro rata to the holders
of its Common Shares any additional shares of stock of any class
or other rights;
(c) there shall be any subdivision, consolidation, capital
reorganization, or reclassification of the capital stock of the
Company, or merger, amalgamation or arrangement of the Company
with, or sale of all or substantially all of its assets to,
another corporation; or
(d) there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
then, and in any one or more of such cases, the Company shall give to the
Holder of this Warrant, at least twenty days prior written notice of the date
on which the books of the Company shall close or a record shall be taken for
such dividend, distribution or subscription rights, or for determining rights
to vote with respect to such subdivision, consolidation, reorganization,
reclassification, merger, amalgamation, arrangement, dissolution, liquidation
or winding-up and in the case of any such subdivision, consolidation,
reorganization, reclassification, merger, amalgamation, arrangement, sale,
dissolution, liquidation or winding-up, at least twenty days' prior written
notice of the date when the same shall take place. Such notice in accordance
with the foregoing clause, shall also specify, in the case of any such
dividend, distribution or subscription rights, the date on which the holders
of Common Shares shall be entitled thereto, and such notice in accordance
with the foregoing shall also specify the date on which the holders of Common
Shares shall be entitled to exchange their Common Shares for securities or
other property deliverable upon such subdivision, consolidation,
reorganization, reclassification, merger, amalgamation, arrangement, sale,
dissolution, liquidation or winding-up as the case may be. Each such written
notice shall be given by first class mail, registered postage prepaid,
addressed to the Holder of this Warrant at the address of such holder, as
shown on the books of the Company.
3. As used in this section, the term "Common Shares" shall mean and include
the Company's presently authorized shares of Common Stock, $.001 par value, and
shall also include any capital stock of any class of the Company hereafter
authorized which shall not be limited to a fixed sum or percentage in respect of
the rights of the holders thereof to participate in dividends and in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding-up of the Company.
4. This Warrant shall not entitle the Holder to any rights as a shareholder
of the Company, including without limitation, voting rights, except that the
Company shall concurrently furnish to the Holder a copy of all notices which are
furnished to holders of the common shares.
5. This Warrant is not transferable except pursuant to an exemption from
registration and qualification requirements in accordance with federal and
applicable state or other securities laws.
6. This Warrant and any Common Shares acquired pursuant to this Warrant will
be subject to restrictions under federal and applicable state or other
securities laws and shall bear substantially the following legend, and all other
legends as may from time to time be required by any then applicable securities
laws:
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED
OR DISPOSED OF IN THE ABSENCE OF A REGISTRATION STATEMENT AND
QUALIFICATION IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE
ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION
FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS UNDER
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO
REGULATION S AS PROMULGATED UNDER THE ACT.
7. This Warrant is exchangeable upon its surrender by the Holder at the
Company's principal office, for new Warrants of like tenor representing in the
aggregate the right to subscribe for and purchase the number of shares which may
be subscribed for and purchased hereunder, each of such new Warrants to
represent the right to subscribe for and purchase such number of Common Shares
as shall be designated by the Holder at the time of such surrender.
8. Any notice or other communication required to be given by the Company
under this Warrant, whether to the Holder or otherwise, shall be delivered or
telecopied as follows:
David P. Noyes
--------------------
--------------------
Any notice or other communication so given shall be deemed to have been
given and received when delivered, if delivered, and upon transmission, if
telecopied, and if the date of such transmission is not a business day, on the
next ensuing business day.
9. Time is of the essence hereof.
10. This Warrant shall be governed by and construed in accordance with the
laws of the State of California.
11. The Common Shares purchasable upon exercise of this Warrant shall be
subject to the registration rights set forth in the Registration Rights
Agreement between the individual and the Company.
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eSynch Corporation has caused this Warrant to be signed by its duly authorized
officers.
ESYNCH CORPORATION
Date: January 25, 1999
By: /s/ Thomas Hemingway
---------------------------------
Thomas Hemingway, Chairman, CEO
By: /s/ T. Richard Hutt
---------------------------------
T. Richard Hutt, Secretary/ Treasurer
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SUBSCRIPTION FORM
TO:
_________________________, the holder of the within Share Purchase Warrant (the
"Warrant"), subscribes for __________ of the common shares of referred to in the
Warrant (the "Common Shares") according to the conditions thereof, and herewith
makes payment of the Exercise Price in full for the said number of shares at the
rate of $_____ per share by a certified check in the amount of $__________ is
enclosed herewith for such payment.
The undersigned hereby directs that the shares hereby subscribed for be issued
and delivered as follows:
NAME ADDRESS
- ----------------------------- ------------------------------
-----------------------------
-----------------------------
DATED at ____________________ this _____ day of ____________________, _____.
-----------------------------
Signature of Holder
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Exhibit 4.9
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") made effective as of this 29th
day of October, 1999, by and between, eSynch Corporation, having its business
offices located at (the "Company") and Lee Puglisi (the Consultant") with its
business offices located at 310 Midland Ave., Riveredge NJ 07661
WITNESSETH:
WHEREAS, the Company desires to retain the Consultant and the Consultant
desires to be retained by the Company, all pursuant to the terms and conditions
herein set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, the parties agree as follows:
1. RETENTION. The Company hereby retains the Consultant to perform
general consulting services related to the affairs of the Company, and
the Consultant hereby accepts such retention and shall perform for the
Company the duties described herein to the best of its ability. In this
regard, the Consultant shall devote such business time and attention to
matters on which the Consultant deems necessary. Notwithstanding
anything herein to the contrary, the Consultant shall not be required to
devote more than thirty man hours per month. For purposes of this
Agreement, a man hour shall mean one hour spent by Lee Puglisi, other
employees or advisors used by the Consultant regarding the affairs of the
Company.
(a) The services to be rendered by the Consultant to the Corporation
shall under no circumstances, pursuant to the terms of this
Agreement, include the following:
(i) Any activities which could be deemed by the Securities and
Exchange Commission to constitute investment banking or any
other activities requiring the Consultant to register as a
broker-dealer under the Securities Exchange Act of 1934.
(ii) Any activities which could be deemed to be in connection with
the offer or sale of securities in a capital-raising
transaction
(b) The Consultant agrees, to the extent reasonably required in the
conduct of the business of the Company, to provide advice,
consultation and recommendations to the Company including the
following:
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1. Develop an in-depth familiarization with the Company's
business objectives and bring to its attention potential
or actual opportunities, which meet those objectives or
logical extensions thereof
2. Comment on the Company's corporate development including
such factors as position in competitive environment,
financial performances vs. Competition, strategies,
operational viability, etc.
3. Review and comment upon the Company's annual and
quarterly reports and other financial publications.
4. Review and comment upon the Company's financial public
relations plan.
5. Keep the Company informed on any externally originated
information disseminated about it.
6. Critically evaluate the Company's performance in view of
its corporate planning and business objectives.
7. Assist the Company in improving its shareholder relations
by developing long range programs for shareholder
communication.
8. Advise the Company as to selection of suitable public
relations counsel.
9. Analyze and assess alternatives for the Company,
presented by the Company.
(c) The Consultant agrees to use its best efforts in the furnishing of
advice and recommendations and for this purpose the Consultant
shall keep available an adequate organization of personnel or a
network of outside professionals for the performance of its
obligations under this Agreement. In order to allow the
Consultant to be kept current with the affairs of the Company, the
Company will continuously provide to the Consultant in a timely
fashion, such updating information in addition to the "due
diligence" materials previously supplied. In the event that the
Company fails or refuses to furnish any such material or
information reasonably requested by the Consultant, and thus
prevents or impedes Consultant's performance hereunder, any
liability of Consultant to perform shall not be a breach of its
obligations hereunder The Company will provide "due diligence"
presentations as reasonably requested by the Consultant.
4. TRANSFERABILITY OF THE SHARES.
(a) The Consultant acknowledges it as acquiring the Shares for
investment purposes only, and not for distribution or
fractionalization. The Shares have not been registered under
federal or state securities laws. Transfer of the Shares is
accordingly restricted and, unless a registration statement
relating to the issuance of the Shares is in effect at the time of
issuance, the Shares will bear appropriate restrictive legends.
The Company shall allow the Consultant to direct the allocation of
the Shares to up to four persons or to hypothecate, sell, assign
or transfer (a" Transfer") all or a part of the Shares to up to
four
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persons, including principals of the Consultant, provided
that (i) the Consultant confirms to the Company it has not made
any offer to sell or solicitation of offers to buy the Shares, and
that it has conveyed to the potential transferee(s) (the
"Transferees") all information necessary to fully inform the
Transferees of the Company and its business, (ii) the Transferee's
establish to the Company's satisfaction that the Transferees are
accredited investors (as defined under Regulation D) (iii) the
Transferees are acquiring the Shares for investment purposes only
and (iv) acknowledge that they have been given access to all
material information regarding the Company, and (v) such other
reasonable requirement of the securities laws is available for the
Transfer of the Shares.
5. NOT LICENSED AS A BROKER-DEALER OR INVESTMENT ADVISOR. Neither
Consultant nor any employee of Consultant is a licensed broker-dealer and
Consultant is not being retained to offer, sell or place any securities
of the Company. No fees paid pursuant to this Agreement relate to
commissions for the placement or sale of securities. Neither Consultant
nor any employee of Consultant is a licensed investment adviser and
Consultant is not being retained to make any valuations of the securities
of the Company or of any entity the Company may consider acquiring in the
future. The Company acknowledges that neither the Consultant nor any
employee of Consultant has been retained to provide investment advisory
services to the Company.
6. EXPENSES. The Company agrees to pay and/or reimburse the Consultant
for any "extraordinary" expenses incurred by the Consultant. Any
"extraordinary" expenses paid and/or reimbursed under this Agreement will
require the Company's prior authorization.
7. LIABILITY OF PARTIES. The Consultant shall have no liability with
respect to decisions made or actions taken by the Company in reliance
on advice or recommendations given by the Consultant. The Company agrees
to indemnify and hold harmless the Consultant and its affiliates , the
respective directors, officers, partners, agents, and employees and each
other person, if any, controlling the Consultant or any of its affiliates
(collectively the "Consultant Parties"), to the full extent lawful, from
and against all loses, claims, damages, liabilities and expenses incurred
by them (including attorneys' fees and disbursements) that result from
actions taken or omitted to be taken (including any untrue statements
made or any statements omitted to be made) by the Company, its agents or
employees. The Consultant will indemnify and hold harmless the Company
and the respective directors, officers, agents and employees of the
Company and each other person, if any, controlling the Company or any of
its affiliates (the "Company Parties") from and against all losses,
claims, damages, liabilities and expenses that result from bad faith,
gross negligence or unauthorized representations of the Consultant. Each
person or entity seeking indemnification hereunder shall promptly notify
the Company, or the Consultant as applicable, of any loss, claim, damage
or expense for which the Company or the Consultant as applicable, may
become liable pursuant to this Section, shall not pay, settle or
acknowledge liability under any such claim without consent of the party
liable
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for indemnification, and shall permit the Company or Consultant as
applicable a reasonable opportunity to cure any underlying problems or to
mitigate actual or potential damages. The scope of this indemnification
between the Consultant and the Company shall be limited to, and pertain
only to transactions contemplated or entered into pursuant to this
Agreement.
The Company or the Consultant, as applicable, shall have the
opportunity to defend any claim for which it may be liable hereunder,
provided it notifies the party claiming the right to indemnification
within 15 days of notice of the claim.
The rights stated pursuant to the preceding two paragraphs shall
be in addition to any rights that the Consultant , the Company, or any
other person entitled to indemnification may have in common law or
otherwise, including but not limited to , any right to contribution.
8. STATUS OF CONSULTANT. The Consultant shall be deemed to be an
independent contractor. The Consultant shall have no authority to, and
shall not, bind the Company to any agreement or obligation with a third
party. Nothing in this Agreement shall imply that the parties are
co-partners or joint -ventures with each other.
9. OTHER ACTIVITIES OF CONSULTANT. The Company realizes that the
Consultant now renders, and may continue to render services similar to
those services being rendered under this Agreement to other companies,
some of which may conduct business and activities similar to those of the
Company.
10. TERM. The Consultant shall be retained for services described herein for
a one (1) year term commencing as of the effective date of this
Agreement. This Agreement may only be terminated by both parties written
mutual consent. If during the term of this Agreement both parties
mutually consent to terminate this Agreement prior to the termination
date, then, the Consultant's rights under this Agreement shall survive
any termination thereof.
11. STOCK GRANT.
(a) The Company hereby agrees to grant as compensation for services
Fifteen Thousand (15,000) non-assessable, fully paid for and
issued shares of the Company's Common Stock (hereinafter the
"Shares").
(b) The Company agrees to deliver the Shares to the Consultant within
fourteen (14) days from the date of this Agreement.
12. TRADE SECRETS AND DOCUMENTATION. Consultant will treat as proprietary
any information belonging to the Company, or any third parties disclosed
to Consultant in the course of Consultant's services which is designated
by an appropriate stamp or
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legend as being confidential. Notwithstanding the foregoing, the
Consultant shall not be required to maintain confidentiality with
respect to information (i) which is or becomes part of the public
domain not due to the breach of this Agreement by Consultant; (ii) of
which it had independent knowledge prior to disclosure; (iii) which
comes into the possession of Consultant in the normal and routine
course of its own business from and through independent
non-confidential sources or (iv) which is required to be disclosed by
Consultant by governmental requirements.
13. CONTROL. Nothing contained herein shall be deemed to require the
Company to take any action contrary to its Certificate of Incorporation
or By-Laws, or any applicable statute or regulation, or to deprive its
Board of Directors of their responsibility for any control of the conduct
of the affairs of the Company.
14. NOTICES. Any notices hereunder shall be sent to the Company and the
Consultant at their respective addresses above set forth. Any notice
shall be given by registered or certified mail, postage prepaid, and
shall be deemed to have been given when deposited in the United States
mail. Either party may designate any other address to which notice shall
be given, by giving written notice to the other of such change of address
in the matter herein provided. Any notices required to be given to the
holders of the Shares shall be deemed properly made when sent to the
Consultant in the manner set forth above. The Consultant shall use its
best efforts to promptly forward such notices to the holders of the
Shares.
15. GOVERNING LAW. This Agreement has been made in the State of
California and shall be construed and governed in accordance with the
laws thereof without regard to conflicts of laws.
16. ENTIRE AGREEMENT. This Agreement contains the entire Agreement between
the parties, may not be altered or modified, except in writing and signed
by the party to be charged thereby and supersedes any and all previous
agreements between the parties.
17. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and their respective heirs, administrators, successors and
assignees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
eSynch Corporation
By: By:
-------------------- --------------------
Tom Hemingway, CEO Lee Puglisi, Consultant
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EXHIBIT 4.10
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") made effective as of this 10th
day of January, 1999, by and between, eSynch Corporation, having its business
offices located at 15502 Mosher Ave, Tustin, CA (the "Company") and Ryan
Spencer (the Consultant") with its business offices located at 400 East 400
South, Salt Lake City, UT 84111
WITNESSTH:
WHEREAS, the Company desires to retain the Consultant and the Consultant
desires to be retained by the Company, all pursuant to the terms and conditions
herein set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, the parties agree as follows:
1. RETENTION. The Company hereby retains the Consultant to perform
general consulting services related to the affairs of the Company, and
the Consultant hereby accepts such retention and shall perform for the
Company the duties described herein to the best of its ability. In this
regard, the Consultant shall devote such business time and attention to
matters on which the Consultant deems necessary. Notwithstanding
anything herein to the contrary, the Consultant shall not be required to
devote more than thirty man hours per month. For purposes of this
Agreement, a man hour shall mean one hour spent by Ryan Spencer, other
employees or advisors used by the Consultant regarding the affairs of the
Company.
(a) The services to be rendered by the Consultant to the Corporation
shall under no circumstances, pursuant to the terms of this
Agreement, include the following:
(i) Any activities which could be deemed by the Securities and
Exchange Commission to constitute investment banking or any other
activities requiring the Consultant to register as a
broker-dealer under the Securities Exchange Act of 1934.
(ii) Any activities which could be deemed to be in connection with
the offer or sale of securities in a capital-raising transaction
(b) The Consultant agrees, to the extent reasonably required in the
conduct of the business of the Company, to provide advice,
consultation and recommendations to the Company including the
following:
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1. Develop an in-depth familiarization with the
Company's business objectives and bring to its
attention potential or actual opportunities, which
meet those objectives or logical extensions thereof
2. Comment on the Company's corporate development
including such factors as position in competitive
environment, financial performances vs. Competition,
strategies, operational viability, etc.
3. Review and comment upon the Company's annual and
quarterly reports and other financial publications.
4. Review and comment upon the Company's financial
public relations plan.
5. Keep the Company informed on any externally
originated information disseminated about it.
6. Critically evaluate the Company's performance in view
of its corporate planning and business objectives.
7. Assist the Company in improving its shareholder
relations by developing long range programs for
shareholder communication.
8. Advise the Company as to selection of suitable public
relations counsel.
9. Analyze and assess alternatives for the Company,
presented by the Company.
(c) The Consultant agrees to use its best efforts in the furnishing of
advice and recommendations and for this purpose the Consultant
shall keep available an adequate organization of personnel or a
network of outside professionals for the performance of its
obligations under this Agreement. In order to allow the
Consultant to be kept current with the affairs of the Company, the
Company will continuously provide to the Consultant in a timely
fashion, such updating information in addition to the "due
diligence" materials previously supplied. In the event that the
Company fails or refuses to furnish any such material or
information reasonably requested by the Consultant, and thus
prevents or impedes Consultant's performance hereunder, any
liability of Consultant to perform shall not be a breach of its
obligations hereunder The Company will provide "due diligence"
presentations as reasonably requested by the Consultant.
4. TRANSFERABILITY OF THE SHARES.
(a) The Consultant acknowledges it as acquiring the Shares for
investment purposes only, and not for distribution or
fractionalization. The Shares have not been registered under
federal or state securities laws. Transfer of the Shares is
accordingly restricted and, unless a registration statement
relating to the issuance of the Shares is in effect at the time of
issuance, the Shares will bear appropriate restrictive legends.
The Company shall allow the Consultant to direct the allocation of
the Shares to up to four persons or to hypothecate, sell, assign
or transfer (a" Transfer") all or a part of the Shares to up to
four
2
<PAGE>
persons, including principals of the Consultant, provided
that (i) the Consultant confirms to the Company it has not made
any offer to sell or solicitation of offers to buy the Shares, and
that it has conveyed to the potential transferee(s) (the
"Transferees") all information necessary to fully inform the
Transferees of the Company and its business, (ii) the Transferee's
establish to the Company's satisfaction that the Transferees are
accredited investors (as defined under Regulation D) (iii) the
Transferees are acquiring the Shares for investment purposes only
and (iv) acknowledge that they have been given access to all
material information regarding the Company, and (v) such other
reasonable requirement of the securities laws is available for the
Transfer of the Shares.
5. NOT LICENSED AS A BROKER-DEALER OR INVESTMENT ADVISOR. Neither
Consultant nor any employee of Consultant is a licensed broker-dealer and
Consultant is not being retained to offer, sell or place any securities
of the Company. No fees paid pursuant to this Agreement relate to
commissions for the placement or sale of securities. Neither Consultant
nor any employee of Consultant is a licensed investment adviser and
Consultant is not being retained to make any valuations of the securities
of the Company or of any entity the Company may consider acquiring in the
future. The Company acknowledges that neither the Consultant nor any
employee of Consultant has been retained to provide investment advisory
services to the Company.
6. EXPENSES. The Company agrees to pay and/or reimburse the Consultant
for any "extraordinary" expenses incurred by the Consultant. Any
"extraordinary" expenses paid and/or reimbursed under this Agreement will
require the Company's prior authorization.
7. LIABILITY OF PARTIES. The Consultant shall have no liability with
respect to decisions made or actions taken by the Company in reliance
on advice or recommendations given by the Consultant. The Company agrees
to indemnify and hold harmless the Consultant and its affiliates , the
respective directors, officers, partners, agents, and employees and each
other person, if any, controlling the Consultant or any of its affiliates
(collectively the "Consultant Parties"), to the full extent lawful, from
and against all loses, claims, damages, liabilities and expenses incurred
by them (including attorneys' fees and disbursements) that result from
actions taken or omitted to be taken (including any untrue statements
made or any statements omitted to be made) by the Company, its agents or
employees. The Consultant will indemnify and hold harmless the Company
and the respective directors, officers, agents and employees of the
Company and each other person, if any, controlling the Company or any of
its affiliates (the "Company Parties") from and against all losses,
claims, damages, liabilities and expenses that result from bad faith,
gross negligence or unauthorized representations of the Consultant. Each
person or entity seeking indemnification hereunder shall promptly notify
the Company, or the Consultant as applicable, of any loss, claim, damage
or expense for which the Company or the Consultant as applicable, may
become liable pursuant to this Section, shall not pay, settle or
acknowledge liability under any such claim without consent of the party
liable
3
<PAGE>
for indemnification, and shall permit the Company or Consultant as
applicable a reasonable opportunity to cure any underlying problems or to
mitigate actual or potential damages. The scope of this indemnification
between the Consultant and the Company shall be limited to, and pertain
only to transactions contemplated or entered into pursuant to this
Agreement.
The Company or the Consultant, as applicable, shall have the
opportunity to defend any claim for which it may be liable hereunder,
provided it notifies the party claiming the right to indemnification
within 15 days of notice of the claim.
The rights stated pursuant to the preceding two paragraphs shall
be in addition to any rights that the Consultant, the Company, or any
other person entitled to indemnification may have in common law or
otherwise, including but not limited to , any right to contribution.
8. STATUS OF CONSULTANT. The Consultant shall be deemed to be an
independent contractor. The Consultant shall have no authority to, and
shall not, bind the Company to any agreement or obligation with a third
party. Nothing in this Agreement shall imply that the parties are
co-partners or joint -ventures with each other.
9. OTHER ACTIVITIES OF CONSULTANT. The Company realizes that the
Consultant now renders, and may continue to render services similar to
those services being rendered under this Agreement to other companies,
some of which may conduct business and activities similar to those of the
Company.
10. TERM. The Consultant shall be retained for services described herein for
a one (1) year term commencing as of the effective date of this
Agreement. This Agreement may only be terminated by both parties written
mutual consent. If during the term of this Agreement both parties
mutually consent to terminate this Agreement prior to the termination
date, then, the Consultant's rights under this Agreement shall survive
any termination thereof.
11. STOCK GRANT.
(a) The Company hereby agrees to grant as compensation for services
Three Thousand (3,000) non-assessable, fully paid for and issued
shares of the Company's Common Stock (hereinafter the "Shares").
(b) The Company agrees to deliver the Shares to the Consultant within
fourteen (14) days from the date of this Agreement.
12. TRADE SECRETS AND DOCUMENTATION. Consultant will treat as proprietary
any information belonging to the Company, or any third parties disclosed
to Consultant in the course of Consultant's services which is designated
by an appropriate stamp or
4
<PAGE>
legend as being confidential. Notwithstanding the foregoing, the
Consultant shall not be required to maintain confidentiality with
respect to information (i) which is or becomes part of the public
domain not due to the breach of this Agreement by Consultant; (ii) of
which it had independent knowledge prior to disclosure; (iii) which
comes into the possession of Consultant in the normal and routine
course of its own business from and through independent
non-confidential sources or (iv) which is required to be disclosed by
Consultant by governmental requirements.
13. CONTROL. Nothing contained herein shall be deemed to require the
Company to take any action contrary to its Certificate of Incorporation
or By-Laws, or any applicable statute or regulation, or to deprive its
Board of Directors of their responsibility for any control of the conduct
of the affairs of the Company.
14. NOTICES. Any notices hereunder shall be sent to the Company and the
Consultant at their respective addresses above set forth. Any notice
shall be given by registered or certified mail, postage prepaid, and
shall be deemed to have been given when deposited in the United States
mail. Either party may designate any other address to which notice shall
be given, by giving written notice to the other of such change of address
in the matter herein provided. Any notices required to be given to the
holders of the Shares shall be deemed properly made when sent to the
Consultant in the manner set forth above. The Consultant shall use its
best efforts to promptly forward such notices to the holders of the
Shares.
15. GOVERNING LAW. This Agreement has been made in the State of
California and shall be construed and governed in accordance with the
laws thereof without regard to conflicts of laws.
16. ENTIRE AGREEMENT. This Agreement contains the entire Agreement between
the parties, may not be altered or modified, except in writing and signed
by the party to be charged thereby and supersedes any and all previous
agreements between the parties.
17. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and their respective heirs, administrators, successors and
assignees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
eSynch Corporation
By: By:
---------------------- ----------------------
Tom Hemingway, CEO Ryan Spencer, Consultant
<PAGE>
JEFFERS, SHAFF & FALK, LLP
ATTORNEYS AT LAW
18881 VON KARMAN AVENUE
SUITE 1400
IRVINE, CALIFORNIA 92612
TELEPHONE: (949) 660-7700
FACSIMILE: (949) 660-7799
March 24, 2000
eSynch Corporation.
15502 Mosher Avenue
Tustin, California 92780
Attention: Thomas Hemingway
Re: ISSUANCE OF SHARES PURSUANT TO S-8 REGISTRATION STATEMENT
---------------------------------------------------------
Dear Mr. Hemingway:
This letter relates to the issuance of 823,700 shares of common
stock, $.001 par value (the "Shares"), of eSynch Corporation, a Delaware
corporation (the "Company") registered pursuant to that Registration
Statement on Form S-8, filed with the Securities and Exchange Commission on
March 24, 2000 (the "Registration Statement"). You have requested that we
deliver to you an opinion as to whether the Shares will have been duly
authorized, validly issued, and, when issued, will be fully paid and
non-assessable shares of common stock of the Company. We have examined the
Restated Certificate of Incorporation, and such other corporate records,
including the resolutions of the Company's Board of Directors, and such other
documents as we have deemed necessary in order to express the opinion set
forth below. In our examination, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity of all originals of all documents submitted to us as
copies. As to questions of fact material to such opinion, we have relied upon
statements and representations of the Company.
Our opinion is based on existing law that is subject to change
either prospectively or retroactively. Relevant laws could change in a manner
that could adversely affect the Company or its stockholders. We have no
obligation to inform the Company of any such change in the law. We have not
been requested to opine, and we have not opined, as to any issues other than
those expressly set forth herein. This opinion extends only to questions
relating to the validity of the Shares offered and sold under the
Registration Statement. We express no opinion with respect to any other issue.
We are admitted to practice law in the State of California and our
opinion is limited to federal law and the corporate laws of the State of
California and the State of Delaware that affect such opinion. We express no
opinion with respect to any other law or the laws of any other jurisdiction.
<PAGE>
eSynch Corporation
March 24, 2000
Page 2
Assuming the Shares are issued and paid for in accordance with the
terms of the offering described in the Registration Statement, including
documents incorporated by reference thereto, and when certificates
representing such Shares have been issued to the purchasers, based on the
foregoing, we are of the opinion that the Shares will have been duly
authorized, validly issued, and will be fully paid and non-assessable shares
of common stock of the Company.
For purposes of rendering this opinion we have made such legal and
factual inquiries as we have deemed necessary under the circumstances.
Although we have not independently verified all of the facts relied upon for
purposes hereof, nothing has come to our attention that has led us to believe
that the facts are other than as stated herein or that there exist other
material facts not considered.
Our Opinion contained herein is solely for the benefit of the
Company and may be relied upon by the Company only in connection with the
Registration Statement. In this regard, we hereby consent to the filing of
this opinion, including this consent, as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Jeffers, Shaff & Falk, LLP
--------------------------------
Jeffers, Shaff & Falk, LLP
<PAGE>
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
(801) 532-2200
Member of AJCPA Division of Firms Fax (801) 532-7944
Member of SECPS 345 East Broadway, Suite 200
Member of Summit International Associates Salt Lake City, Utah 84111-2593
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference of our report dated March 3,
2000, with respect to the consolidated financial statements of eSynch
Corporation and Subsidiaries as of December 31, 1999 and 1998 and for the
years then included in the Registration Statement on Form S-8 and related
Prospectus of eSynch Corporation for the registration of 823,700 shares of
common stock (the "Registration Statement").
/s/ HANSEN, BARNETT & MAXWELL
HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
March 23, 2000
